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

ADDITIONAL INSURED
Those individuals or entities who generally are not automatically included as Insured under the liability policy of others, but for whom the Named Insured provides a certain degree of protection under its liability policies. An endorsement is typically required to affect additional Insured status for these parties.

ADDITIONAL NAMED INSURED

1. A person or organization, other than the first Named Insured, identified as an Insured in the policy declarations or an addendum to the policy declarations.
2. A person or organization added to a policy after the policy is written with the status of Named Insured. This entity would have the same rights and responsibilities as an entity named as an Insured in the policy declarations (other than those rights and responsibilities reserved to the first Named Insured).

ADJUSTER
One who settles insurance claims. An adjuster investigates the loss and determines the extent of coverage. In first party (e.g., property) insurance, the adjuster negotiates a settlement with the Insured. In liability insurance, the adjuster coordinates the Insured's defense and participates in settlement negotiations.

ADMITTED INSURER
An insurer licensed to do business in a given state.

ADVERSE PUBLICITY COVERAGE
Coverage that protects the Insured from the loss of income resulting from adverse publicity. The coverage is usually available on a named peril basis.

ADVERSE SELECTION
An imbalance in an exposure group created when persons who perceive a high probability of loss for themselves seek to buy insurance to a much greater degree than those who perceive a low probability of loss.

ADVERTISING INJURY
Unintentional slander, libel, infringement of copyright, trademark, or slogan arising from a company's advertising. Companies in the advertising business need more specialized coverage.

AGENCY AGREEMENT
A written contract stipulating the arrangement between an insurance agency and the insurer it represents. Important details such as ownership of renewals, commission percentages, and duties and responsibilities of each party are usually spelled out in this agreement.

AGENT'S ERRORS AND OMISSIONS
Liability coverage for any act or omission of the Insured (or of any other person for whose acts or omissions the Insured is legally responsible), arising out of the performance of professional services for others in the Insured's capacity as an insurance agent or insurance broker.

AGENT
A person or organization who solicits, negotiates, or instigates insurance contracts on behalf of an insurer. Agents can be either independent or employees of an insurer.

AGGREGATE LIMIT
A limit in an insurance policy stipulating the most it will pay for all covered losses sustained during a specified period of time, usually a year. Aggregate limits are commonly included in liability polices. They are sometimes included in property policies with respect to certain catastrophic exposures such as earthquake and flood.

ALLOCATED LOSS ADJUSTMENT EXPENSES (ALAE)
Loss adjustment expenses that are assignable or allocable to specific claims. Fees paid to outside attorneys, experts, and investigators used to defend claims are examples of ALAE.

ASBESTOS
A mineral fiber that can pollute air or water and cause cancer or asbestosis when inhaled. The Environmental Protection Agency (EPA) has banned or severely restricted its use in manufacturing and construction. The use of asbestos in buildings was banned during the 1970s. The EPA estimates that 20% of the nation's 3.6 million public and commercial buildings contain forms of asbestos.

ASSUMPTION OF RISK
A common law defense that may be used to pass the responsibility for loss or injury onto the injured party. The defense asserts that the individual had knowledge and understanding of the hazards involved in the undertaking and is therefore not entitled to recovery for the loss. However, legal decisions have eroded and narrowed the applicability of this defense.

AUTOMOBILE INSURANCE

1. Liability insurance coverage for losses caused by injuries to persons and legal liability imposed on the Insured for such injury or for damage to property of others.
2. Physical damage insurance for losses caused by damage to or loss of the insured vehicle.

AUTOMOBILE
CA land motor vehicle, trailer, or semitrailer designed for travel on public roads, not including "mobile equipment." This definition is important in determining whether liability coverage is afforded under an automobile liability policy or a commercial general liability policy (in the case of mobile equipment).

BINDER
A legal agreement issued by an agent or an insurer to provide temporary insurance until a policy can be written. The binder should contain a definite time limit, be in writing, and clearly designate the insurer in which the risk is bound, as well as the amount, the perils Insured against, and the type of insurance.

BROKER
An independent solicitor of insurance for an Insured. Brokers, unlike independent agents, do not usually have "binding authority" under an agency contract. Therefore, they usually cannot obligate an insurer to provide coverage prior to the insurer's consent.

CARE, CUSTODY, OR CONTROL (CCC)
An exclusion common to several forms of liability insurance eliminating coverage with respect to damage to property in the Insured's care, custody, or control. In some cases, CCC has been determined to entail physical possession of the property. In others, any party with a legal obligation to exercise care with respect to property has been deemed to have that property in its CCC.

CARRIER
An insurance or reinsurance company that insures or "carries" the insurance or reinsurance.

CATASTROPHE PLAN
A prepared strategy detailing how a particular organization responds to a disaster.

CERTIFICATE OF INSURANCE
A document providing evidence that certain general types of insurance coverages and limits have been purchased by the party required to furnish the certificates.

CLAIM EXPENSES
Expenses of adjusting claims. Allocated claim expenses include court costs, fees, expenses of independent adjusters, lawyers, witnesses, and other expenses that can be charged to specific claims. Unallocated claim expenses represent salaries and other overhead expenses that are incurred but which cannot be charged against specific claims.

CLAIMANT
The person making a claim. Use of the word "claimant" usually denotes that the person has not yet filed a lawsuit. Upon filing a lawsuit, the claimant becomes a "plaintiff," but the terms are often used interchangeably.

COMMERCIAL GENERAL LIABILITY
A standard insurance policy issued to business organizations to protect them against liability claims for bodily injury and property damage arising out of premises, operations, products, and completed operations, and advertising and personal injury liability.

COMMON LAW
Unwritten law derived from court case decisions based on custom and precedent. Common law is contrasted with statutory law.

COMPENSATORY DAMAGES
A sum of money to which a plaintiff is entitled that, so far as is possible, compensates the plaintiff for the actual loss sustained. See also Punitive Damages.

COMPLETED OPERATIONS
A form of liability insurance that covers accidents arising out of operations, which have been completed or abandoned, provided the accident occurs away from premises owned, rented, or controlled by the Insured.

CONCEALMENT
Failure of the Insured to disclose to the company a fact material to the acceptance of the risk at the time application is made.

CONCURRENT CAUSATION
A theory adopted by some courts, which holds that if a given loss has more than one cause, and at least one of the causes is covered by the policy, the loss is covered even if the policy specifically excludes another cause of loss. For example, a court might determine that a property policy that specifically excludes flood damage does cover a flood loss when the municipality's negligence in improperly installing a sewage system is a concurrent cause of the loss.

CONCURRENT INSURANCE
Two or more policies covering the same exposure and having the same policy period and type of coverage trigger. It is important for primary and excess liability policies to be concurrent to avoid potential coverage gaps.

CONDITIONS
In an insurance policy, provisions that explain the duties, rights, and options of the Insured and the insurer.

CONTINGENT LIABILITY
The liability imposed on an individual, corporation, or partnership because of accidents caused by persons (other than employees) for whose acts the first party may be held responsible under the law.

CONTRACTUAL LIABILITY
Liability assumed by contract. The commercial general liability policy extends coverage for specifically defined contracts, such as real estate leases.

CONTRACT
The following chief requirements are necessary for the formation of a valid contract:

1. Parties having a legal capacity to form a contract
2. Mutual assent of the parties to a promise, or set of promises
3. Valuable consideration
4. Absence of any stature or other rule making the contract void
5. Absence of fraud or misrepresentation by either party

CONTRIBUTORY NEGLIGENCE
The negligence attributed to the person who is making a claim against an Insured. A defense pleaded by the Insured in a lawsuit.

COOPERATION CLAUSE
A policy provision compelling the Insured to assist an insurer in defending claims under a policy. The rationale for this provision is that the Insured, rather than the insurer, is in a much better position to provide certain information about claims that are critical to the defense process.

COUNTERSIGNATURE
The signature of a licensed agent or representative on a policy that validates the contract.

COVERAGE TRIGGER
The event that must occur before a particular liability policy becomes applicable to a given loss. Under an occurrence policy, the occurrence of injury or damage is the trigger. Liability is covered under that policy if the injury or damage occurred during the policy period. Under a claims-made policy, the making of a claim triggers coverage. Coverage triggers serve to determine which liability policy in a series of policies covers a particular loss.

COVERAGE
The word coverage is used synonymously with insurance or protection.

COVERED AUTOS
Most Automobile policies use numerical "symbols" to tell you which automobiles are covered. The symbols are shown with the coverages on the Declarations page (i.e., cover page). For example, symbol 1 (i.e., "any auto") is preferable for liability insurance because it is the broadest. If your policy shows symbol 7 (i.e., specifically described autos) for liability, you should also have symbol 8 (i.e., hired autos) and symbol 9 (i.e., non-owned autos) shown. Symbols 8 and 9 cover the liability of your company resulting from employees using personal or rental vehicles on company business.

CROSS-COMPLAINT
An action brought by the defendant against the plaintiff.

CROSS-DEFENDANT
The party named as the defendant in the cross-complaint.

CROSS LIABILITY COVERAGE
Provides coverage when a suit is brought against an Insured by another entity that is also an Insured under the same policy. Standard ISO general liability polices provide this protection automatically due to the "Separation of Insureds" condition. Some professional and umbrella liability policies, however, contain an Insured-versus-Insured exclusion, which eliminates cross liability coverage.

DAMAGES
Money that the law requires one party to pay to another because of loss or injury suffered by the other party. Compare with Damage.

DECLARATIONS, DECLARATIONS PAGE
The page (or pages) of an insurance policy containing information, such as the Insured's name and address, that the policyholder "declared" (stated as facts) on the application for insurance.

DEDUCTIBLES – AUTOMOBILE
Comprehensive and collision coverages (i.e., damage to your own vehicles) are normally subject to a deductible. You may wish to obtain quotes for several deductible levels to determine if cost savings are possible. Companies with large fleets of automobiles often self-insure all damage to their own vehicles. Due consideration, however, must be given to the possibility that one loss (such as a fire) could damage multiple vehicles.

DEDUCTIBLES – LIABILITY
Liability matters are complicated and insurers need to be involved from the start of a claim. For that reason, commercial general liability policies are often written without a deductible. Larger businesses, however, use a deductible or retention (uninsured retained level of loss) to help control the cost of their liability insurance.

DEDUCTIBLES – PROPERTY
Property policies require that you pay a certain amount of all losses. The purpose is to eliminate the numerous small claims that routinely occur, and to encourage loss prevention. Your insurer only pays the portion of loss in excess of the deductible. You may wish to solicit quotes for various deductible levels to determine what cost savings are possible.

DEFAMATION
Any written or oral communication about a person or thing that is both untrue and unfavorable. Media liability and general liability policies typically provide coverage for claims alleging defamation, although general liability policies exclude this coverage for Insureds engaged in media businesses.

DEFAULT
A failure; specifically the omission or failure to perform a legal or contractual duty.

DEFENSE CLAUSE
An insurance provision in which the insurance company agrees to defend all suits against the Insured with respect to the insurance afforded by the policy.

DEFINITIONS
Provisions that define the words and phrases in an insurance policy, which have a special meaning when they are used elsewhere in that policy. Words defined in some policies are printed in boldface or enclosed by quotation marks.

DEPOSITION
A pretrial testimony of a witness under oath without the presence of a judge or jury to discover evidence relevant to a lawsuit's issue.

DEPRECIATION
Loss in value of property that develops as items age, wear out, or become obsolete. Depreciation reflects value that has already been used up. The actual physical depreciation (wear and tear from use) is subtracted from the replacement cost of Insured property in determining its actual cash value.

DIRECT LOSSES
An almost instantaneous reduction in value of property resulting directly from damage to that property. Compare with Indirect Losses.

DIRECTORS & OFFICERS LIABILITY
This is an "errors and omissions" type of coverage for corporate directors and officers. Even companies that are privately held should consider this coverage. Industry surveys have shown that many Directors and Officers (D&O) liability claims - as much as half - come from sources other than shareholders. Claimants can include competitors, suppliers, customers, employees, and government agencies.

These claims are only a small percentage of all D&O claims. They are significant, however, because without insurance, corporate officials could be held personally liable. Certain claims are insurable, but not legally indemnifiable by the corporation. Many state laws allow insurance companies to provide greater protection than the corporation can by itself. Liability claims against directors and officers have increased in recent years. Law firms that specialize in this field can offer assistance with loss awareness and loss prevention programs.

DISCOVERY
Investigation of the facts of a claim or the alleged proximate cause of an injury. Discovery may include such activities as interrogatories, depositions, expert examination of a product, and review of a plaintiff's medical history.

DISMEMBERMENT
In accident and health insurance policies, dismemberment encompasses the loss of limbs or sight. A fixed benefit is paid to Insureds who suffer certain types of dismemberment under these policies.

ECONOMIC DAMAGES
An award to an injured person in an amount sufficient to compensate for his or her actual monetary loss. Examples of monetary damages include awards for lost wages and medical expenses.

EMPLOYEES AS ADDITIONAL INSUREDS
A general liability endorsement used with pre-1986 general liability forms to provide Insured status to employees of the Named Insured business. Employees are automatically Insureds under current editions of the commercial general liability form and no endorsement is now needed to provide coverage.

ENDORSEMENT
An addendum to an insurance policy that changes the original policy provisions. Endorsements may serve any number of functions, including broadening, restricting, or limiting the scope of coverage, clarifying the application of coverage to some unique exposure, adding other parties as Insureds, or adding locations to the policy.

EQUIPMENT FLOATER
Property insurance covering equipment that is often moved from place to place; a form of inland marine insurance.

ESTOPPEL
A legal doctrine that restrains a party from contradicting its own previous actions if those actions have been reasonable and relied upon by another party. For example, an insurer that has repeatedly accepted late premium payments from an Insured may be estopped from later canceling the policy based on nonpayment because the Insured has been reasonably led to believe that late payments are acceptable.

EXCESS AND SURPLUS LINES INSURANCE
Any type of coverage that cannot be placed with an insurer who is admitted to do business in a certain jurisdiction. Risks placed in excess or surplus lines markets are often substandard (as respects adverse loss experience), unusual, or unable to be placed in conventional markets due to a shortage of capacity.

EXCESS INSURANCE
A policy or bond covering the Insured against certain hazards and applying only to loss or damage in excess of a stated amount or specified primary insurance or self-insurance.

EXCLUSIONS
A provision of an insurance policy or bond referring to hazards, circumstances, or property not covered by the policy.

EXEMPLARY DAMAGES
Damages in excess of the amount needed to compensate for the plaintiff's injury, which is awarded in order to punish the defendant for malicious or wanton conduct; also called "punitive damages."

EXPOSURE BASE
The basis to which rates are applied to determine premium. Exposures may be measured by payroll (as in workers' compensation or general liability), receipts, sales, square footage, area, or man-hours (for general liability), or per unit (as in automobile), or per $100 of value (as in property insurance).

EXPOSURES
Exposures, or loss exposures, are situations that could lead to an accidental loss.

FIRE
The courts have held that the fire must combust rapidly enough to produce a spark, flame, or glow, but not an explosion. In addition, to be a covered cause of loss under an insurance policy, it must be a "hostile" fire as opposed to a "friendly" one (i.e., not in the place where it is intended to be such as a furnace, stove or fireplace). The fire must be accidental and be the proximate cause of the damage.

FIRST DOLLAR COVERAGE
Insurance that provides for the payment of all losses up to the specified limit without any use of deductibles.

FIRST NAMED INSURED
The person or entity listed first on the policy declarations page as an Insured. This primary or first Named Insured is granted certain rights and responsibilities that do not apply to the policy's other Named Insureds. Examples of additional rights of first Named Insureds are the receipt of cancellation notice and return premiums. Unique responsibilities include the notice of loss requirements and premium payment obligations.

FLAT CANCELLATION
The cancellation of a policy as of its effective date, before the insurer has assumed liability. This requires the return of paid premium in full.

FLOATERS
Property policies normally cover property at a specified location. Property that travels or changes locations (e.g., exhibits, construction equipment, or employee tools) is covered by a "Floater" endorsement or policy.

FOLLOW FORM
Refers to an umbrella policy provision that follows the underlying policy as to how the provision applies. Follow Form also identifies an "excess" liability policy that follows the underlying policies for most policy provisions. The policy may stand alone for certain exclusions, conditions, etc., while relating back to the underlying coverage for most provisions. This type of policy form is typically used excess of scheduled underlying insurance and usually contains a requirement that the Insured maintain a scheduled underlying insurance.

FORM
A preprinted document, often several pages long, which contains standard wording that makes up the bulk of an insurance policy.

GENERAL COUNSEL
Typically the highest-ranking lawyer within a corporation.

GENERAL DAMAGES
A subjective monetary award that is designed to compensate an injured person for his or her pain and suffering.

GENERAL LIABILITY (GL)
General Liability policies are the most common business liability policies. As the name implies, these policies cover "general" liability. More specific types of liability such as automobile liability, aircraft liability, or professional malpractice liability are covered under specialized liability policies.

One of the most commonly used policy forms is the Commercial General Liability (CGL) policy. The policy format is similar to an "All Risk" property policy in that the policy covers what it does not exclude. That is, the policy starts with a basic insuring agreement and then refines it with the policy's exclusions, terms, and conditions.

GOOD FAITH SETTLEMENT
A "blessing" by the court that protects a settling defendant from further claims with respect to the incident alleged in the complaint.

GOOD SAMARITAN STATUTES
Laws in various states that relieve physicians of any liability for providing treatment in an emergency situation such as an automobile accident, as long as the treatment provided was not grossly negligent, wanton, or reckless, and the physician received no compensation.

GROSS NEGLIGENCE
Willful and wanton misconduct.

GROUND UP LOSS
The entire amount of an insurance loss, including deductibles, before application of any retention or reinsurance. The original loss to the Insured, after recognizing known salvage and subrogation.

HAZARD
A source of potential harm or a situation with a potential to cause loss.

HIRED AUTOMOBILE
An automobile whose exclusive use and control has been given to another for a consideration. The business auto definition of "Hired Autos," however, also includes borrowed autos, except for those borrowed from employees or partners.

HOLD HARMLESS AGREEMENT
A contract provision under which one party to the contract assumes the possible legal liability of another party to a contract for damages payable. Construction contracts, for example, often require the contractor to indemnify the owner with respect to the owner's liability to members of the public who are injured or whose property is damaged during the course of the contractor's operations. Also known as indemnity clause.

HOST LIQUOR LIABILITY
Liability arising from serving liquor at a business function. Companies in the business of selling or serving alcohol are not covered and require specialized insurance.

INCURRED LOSS RATIO
The ratio of incurred losses (i.e., paid and reserved) to premiums earned.

INCURRED LOSSES
The total amount of paid claims and loss reserves associated with a particular period of time, usually a policy year.

INDEMNIFICATION

1. For policies written on an indemnification basis, the insurer reimburses the Insured for claims and claim costs already paid by the Insured. The Insured must suffer a loss and pay the loss before being indemnified by the insurer.
2. The agreement of one party to assume financial responsibility for the liability of another party. Hold harmless agreements are typically used to impose this transfer of risk.

INDEMNIFY
To restore the party that has had a loss to the same financial position it occupied before the loss. Many insurance policies and all bonds promise to "indemnify" the Insured. Under such a contract, there can be no recovery until the Insured has actually suffered a loss.

INDEMNITEE
The person or organization who is held harmless in a contract (by the indemnitor).

INDEMNITOR
The person or organization who holds another (the indemnitee) harmless in a contract.

INDEMNITY CLAUSE
A contract provision under which one party to the contract assumes the possible legal liability of another party to a contract for damages payable. Construction contracts, for example, often require the contractor to indemnify the owner with respect to the owner's liability to members of the public who are injured or whose property is damaged during the course of the contractor's operations. Also known as a hold harmless agreement.

INDEMNITY
Compensation to the victim of a loss up to the amount of the loss.

INDEPENDENT ADJUSTER
An independent contractor who provides claims adjusting services to various insurance companies and charges a fee for each claim handled.

INDEPENDENT CONTRACTOR
An individual or company who has signed an agreement with another party to perform some job or function on behalf of that party without the direction or oversight of the party.

IN-HOUSE COUNSEL
An attorney employed by the organization for which he or she provides legal services.

INLAND MARINE INSURANCE
A group of property insurance coverages designed to insure exposures that cannot be conveniently or reasonably confined to a fixed location or Insured at a standard rate under a standard form. Coverage includes property in transit over land, certain moveable property, property under construction, instrumentalities of transportation and communication (such as bridges, roads, piers, and television/radio towers), legal liability coverage for bailees, and computerized equipment.

INSIDE ADJUSTER
A claims adjuster who settles claims without conducting any outside investigation. Also known as a telephone adjuster. An inside adjuster is generally used when the claim is clearly covered and there is no question about the circumstances of the accident or the validity of the claim.

INSURABLE INTEREST (PROPERTY AND CASUALTY)
Any interest in or relation to property of such a nature that the occurrence of an event insured against would cause financial loss to the Insured. Insurable interest usually results from property rights, contract rights, and potential legal liability.

INSURANCE
A contractual relationship that exists when one party (the insurer) for a consideration (the premium) agrees to reimburse another party (the Insured) for loss to a specified subject (the risk) caused by designated contingencies (hazards or perils), or to pay on behalf of the Insured all sums for which the Insured may be liable to a third party (the claimant). The term "assurance," commonly used in the UK, is ordinarily considered identical to and synonymous with insurance.

INSURANCE COMPANIES
Organizations chartered under state or provincial laws to act as an insurer. In the United Sates, insurance companies are usually classified as a particular type of company and may write only those kinds of insurance, which are specifically authorized in their charters. Many charters are now broadened to include several types of insurance.

Insurance companies are also categorized as either "admitted" or "excess and surplus lines" companies. The distinction is based upon how the insurer is licensed to transact business within a particular state. Excess and surplus lines companies may not participate in state insurance guarantee or insolvency funds. This fact makes it even more important to review the financial condition of excess and surplus lines insurers.

INSURANCE DEPARTMENT
A governmental entity charged with the regulation and administration of insurance laws and other responsibilities associated with insurance.

INSURANCE POLICY
In broad terms, the entire written contract of insurance. More specifically, it is the basic written or printed document, as well as the coverage forms and endorsements added to it.

INSURANCE SERVICES OFFICE, INC. (ISO)
A nonprofit association of insurance companies that collects statistical data, promulgates rating information, develops standard policy forms, and files information with state regulators on behalf of its member companies. ISO is the "bureau" in most states for homeowners, personal auto, commercial auto, commercial general liability, commercial property, commercial crime, and some lines of professional liability.

INSURANCE TO VALUE
An amount of insurance at, or close to, the value of the property Insured, or which meets coinsurance requirements.

INSURED
A person, business, or organization that is covered by an insurance policy.

INSURER
Party that provides insurance coverage, typically through a contract of insurance. Also known as an insurance company.

INSURING AGREEMENT
A provision in an insurance policy stating, in broad terms, the promises made by the insurer. An insurance policy provides coverage only if the claim is within the scope of the promise expressed in an insuring agreement.

LAW OF LARGE NUMBERS
Theory of probability that is the basis of insurance. The larger the number of exposures, the closer the actual results will approach the probable results expected from an infinite number of exposures. As the number of exposures increases, the difference between the actual and expected losses becomes a smaller percentage of the expected losses.

LEGAL LIABILITY TO PARTICIPANTS
This coverage typically refers to persons while practicing for, or participating in contests or exhibitions of an athletic or sports nature. The coverage responds to and defends you in a suit being made against you, by a participant in a contest or exhibition (of an athletic or sports nature) which you control, promote, or sponsor.

LESSEE
The person or organization to whom a lease is granted (i.e., the "tenant").

LESSOR
The person or organization granting a lease (i.e., the "landlord").

LIABILITY
A provision that extends to persons already insured under a particular policy the broadened coverage features that may be introduced in subsequent editions of that policy form. In umbrella liability insurance, a clause specifying that coverage will be as broad as that provided by the primary liability policies.

LIBERALIZATION CLAUSE
A provision that extends the broadened coverage features that may be introduced in subsequent editions of that policy form to persons already insured under a particular policy. In umbrella liability insurance, a clause specifying that coverage will be as broad as that provided by the primary liability policies.

LIMIT OF LIABILITY
The maximum amount for which an insurer may be liable for any loss, as set forth in the policy.

LIQUOR LAW LIABILITY (DRAMSHOP)
Common law liability imposed on those selling alcoholic beverages, as well as the statutory liability established in some states, which is excluded in general liability policies.

LIQUOR LIABILITY
This type of liability insurance provides coverage for bodily injury or property damage for which you may be held liable by:

• Causing or contributing to the intoxication of any person.
• Furnishing alcoholic beverages to a person under legal drinking age or under the influence of alcohol.
• Violating any statute, ordinance, or regulation relating to the sale, gift, distribution, or use of alcoholic beverages.

This coverage only applies if you are involved in the following activities:

• Manufacturing, selling, or distributing alcoholic beverages
• Serving or furnishing alcoholic beverages for a charge, whether or not such activity requires a license or is for the purpose of financial gain or livelihood
• Serving or furnishing alcoholic beverages without a charge, if a license is required for such activity

LITIGATION
The process of investigating and adjudicating the facts and law in a particular case. In general usage, the bringing or defense of a lawsuit.

LOSS
Any decrease in quantity, quality, or value of property. With reference to policies of indemnity, this term is often used as an expression of the amount of damages that may or may not be covered in whole or in part depending on the cause of the loss and the coverage afforded. In its application to liability policies, it refers to payments made on behalf of the Insured. See Claim.

LOSS CONTROL
The technique of minimizing the frequency or severity of losses with training, safety, and security measures. Also known as risk control.

LOSS DEVELOPMENT
The difference between the original loss as initially reserved by an insurer and its subsequent evaluation at a later date or at the time of its final disposal.

Loss development occurs because of the following:

• Inflation: Both "social inflation" and inflation in the consumer price index (during the time period in which losses are reported and ultimately settled)
• Time lags: Between the occurrence of claims and the time they are actually reported to an insurer

To account for these increases, a "loss development factor" (LDF) or multiplier is usually applied to a claim or group of claims in an effort to more accurately project the ultimate amount for which they will be closed.

LOSSES INCURRED
The total sustained losses during a given period that is the sum of the paid and unpaid but reserved amounts.

LOSS FORECASTING
Predicting future losses through an analysis of past losses. Past loss data must usually span a sufficient number of years (5 or more) to achieve some degree of credibility.

The time span is important because the most recent year’s experience most clearly approximates current exposure, but the earlier year’s losses have had more time to develop. The law of large numbers, exposure data, any anticipated changes in company operations or structure, inflation, workers' compensation benefit changes, and any other relevant factors must be considered when forecasting losses.

LOSS OF CONSORTIUM SUITS
A legal action often brought by the spouse of in injured worker that alleges the loss of spousal services including but not limited to companionship, help with household duties, and sexual relationships. Parents or children of the injured worker claiming the loss of services, typically companionship, can also bring such suits.

Many jurisdictions have allowed these types of actions to be heard even when the worker is already receiving workers' compensation benefits. Coverage for a lawsuit of this type is provided by the employer's liability section of the workers' compensation policy.

LOSS PAYABLE CLAUSE
A clause in a property policy that provides for payment to a party such as a lienholder, in addition to the Insured, for any losses to the Insured property according to the extent of the lienholder's financial interest in the property at the time of the loss.

LOSS RATIO
Proportionate relationship of incurred losses to earned premiums expressed as a percentage. For example, if a firm pays $200,000 of premium for workers' compensation insurance in a given year, and its insurer pays and reserves $100,000 in claims, the firm's loss ratio is 50%.

LOSS REDUCTION
A loss control activity focusing on reducing the severity of losses. Examples include building firewalls to reduce the spread of fire and installing automatic fire sprinklers.

LOSS REPORT
A listing of reported claims providing such information as the date of occurrence, type of claim, amount paid, and amount reserved for each as of the report's valuation date.

LOSS RESERVE
An estimate of the value of a claim or group of claims not yet paid. A case reserve is an estimate of the amount for which a particular claim will ultimately be settled or adjudicated. Insurers also set reserves for their entire books of business to estimate their future liabilities.

LOSS TRENDING
Adjusting historical losses to account for inflationary trends, thus putting their value into current dollars. Historical loss amounts are multiplied by "trending factors" to convert historical loss amounts to current dollar amounts.

LOST POLICY RELEASE
A statement signed by the Named Insured releasing the insurer from all liability under a lost or mislaid contract of insurance in cases where the Insured wants to cancel the policy. Historically, many insurance policies required that the original policy be returned to the insurer to effect cancellation, and a lost policy release served in place of the original policy.

MARKET CYCLES
Market-wide fluctuations in the prevailing level of insurance and reinsurance premiums. A soft market is a period of increased competition, depressed premiums, and excess capacity. It is followed by a hard market, which is a period of rising premiums and decreased capacity.

MARKET VALUE
The price at which a particular property item may be sold.

MASTER POLICY
A policy issued to an Insured to cover property at more than one location. It is also a policy issued to cover the interest of a lender or lessor of property in the possession of others. These policies may also cover the interest of the purchaser or lessee. Under such policies, certificates of the coverage may be issued to the holders of the property covered.

MEDIATION
The act of a third person who assists two adverse parties in adjusting or settling their dispute.

MEDICAL PAYMENTS
An optional coverage available under automobile liability, general liability, and homeowners' policies that pays the medical bills of nonemployees, such as a guest who falls on your premises, without actually establishing your legal liability. This coverage functions as a goodwill gesture and is intended to avoid litigation.

MINIMUM PREMIUM
The least amount of premium to be charged for providing a particular insurance coverage. The minimum premium may apply in any number of ways, for example, per location, per type of coverage, or per policy.

MINOR
In most states, a person under the age of 18.

MISREPRESENTATION
A false or misleading statement made by an Insured that if intentional and material, can allow the insurer to void the insurance contract.

MOBILE EQUIPMENT
A term that is defined in both the commercial general liability and commercial automobile policies. It refers to equipment such as earthmovers, tractors, diggers, farm machinery, forklifts, etc. that even when self-propelled are not considered as automobiles for insurance purposes.

MORAL HAZARD
The possibility of loss being caused or aggravated by the dishonesty or character of the Insured, his agents, or employees. It arises from the character or circumstances of the Insured as distinguished from the inherent nature of the property covered or its location.

MORALE HAZARD
Describes a subjective hazard that tends to increase the probable frequency or severity of loss due to an Insured peril. Morale hazard, as contrasted with moral hazard, does not imply a propensity to cause a loss intentionally, but implies a certain indifference to loss simply because of the existence of insurance.

MOTION TO DISMISS
A motion introduced before trial to attack the action on the basis of insufficiency of the pleading, of process, venue, joinder, or other reason.

MOTION
An application made to a court or judge for the purpose of obtaining a rule or order directing some act to be done in favor of the applicant.

NATIONAL ASSOCIATION OF INSURANCE COMMISSIONERS (NAIC)
An organization of all state insurance commissioners that meets periodically to discuss insurance industry problems and issues that might require legislation or regulation. They also address the need to make various state laws more uniform for insurance companies and other parties.

NEGLIGENCE
Failure to use that degree of care, which is considered a reasonable precaution under the given circumstances. Acts of either omission or commission, or both, may constitute negligence.

NONADMITTED INSURER
An insurance company not licensed to do business in a certain state. Such insurers can nevertheless write coverage through an excess and surplus lines broker that is licensed in these jurisdictions.

NONASSIGNABLE
A policy that cannot be assigned by the owner to a third party.

NONCURRENCY
The condition created by two or more policies covering the same loss exposure that do not have identical inception and expiration dates. Noncurrency of an Insured's umbrella policies and the underlying liability is a problem, because the noncurrent policy terms make it possible for a loss under an underlying policy's annual aggregate limit to use up part of the limit required by the umbrella, thus violating its underlying limits requirement.

NONECONOMIC DAMAGES
An award to an injured person that is not based on actual monetary loss, but rather on other forms of injury (e.g., pain and suffering awards).

NONINSURANCE RISK TRANSFER
The transfer of risk from one party to another party other than an insurance company. This risk management technique usually involves risk transfers by means of hold harmless, indemnity, and insurance provisions in contracts. Also called "contractual risk transfer."

NON-OWNED AUTOMOBILE
Described in commercial auto policies as an auto that is used in connection with the Named Insured's business, but that is neither owned, leased, hired, rented, nor borrowed by the Named Insured. As used in the business auto policy, the term specifically applies to vehicles owned by employees and used for company business. As used in the truckers and motor carriers policies, it applies only if such automobiles are private passenger-type autos. (Autos other than private passenger-type owned by employees are classified as hired autos in the truckers and motor carrier policies.)

NON-OWNED AND HIRED AUTOMOBILE LIABILITY
This coverage is normally provided by an Automobile Insurance Policy. Companies that do not own autos should have this endorsement added to their general liability policy.

NON-OWNED WATERCRAFT LIABILITY
Liability for bodily injury or property damage from the use of a non-owned watercraft (usually limited to boats under a specific length, such as 26 feet). For example, this coverage would respond to a suit for injury or damage if your company chartered a boat for business entertainment. Coverage protects your company, but not the owner of the watercraft.

NOTICE OF CANCELLATION/NONRENEWAL CLAUSES
Provisions in policies mandating that insurers are to provide advance notice of cancellation or nonrenewal of a policy. Most commonly, the required cancellation notice period is 30 days, although state amendatory endorsements frequently extend this period to 60 days.

NOTICE OF CLAIM PROVISION
A provision in a liability insurance policy requiring the Insured to promptly notify the insurer in the event that a claim is made against the Insured. Also called "awareness provision."

NOTICE OF OCCURRENCE
One of the Insured's specified duties under a general liability policy. Notice to the insurer of an occurrence must include the time, place, and circumstances of the occurrence, a description of any resulting injury or damage, and the names and addresses of injured persons and witnesses.

NUCLEAR EXCLUSION

1. A provision or endorsement found in or attached to virtually all commercial property policies (other than the specialty policies designed to cover loss because of nuclear radiation). Eliminates coverage for loss or damage from nuclear reaction, radiation, or radioactive contamination, except that ensuing fire is explicitly covered.
2. A provision or endorsement found in or attached to virtually all commercial lines liability policies. The standard broad form nuclear endorsement most often attached to liability policies precludes coverage only for liability Insured under a nuclear energy liability policy or for which indemnity is available from the U.S. government. The exclusion does not normally apply to liability arising from radioactive isotopes, the most common commercially used nuclear materials.

OTHER INSURANCE CLAUSE
A provision found in almost every insurance policy, stating what is to be done at the time of loss in case any other contract of insurance protection applies to the same loss or claim.

OUTSTANDING LOSSES
Losses that have been reported to the insurer but are still in the process of settlement. Paid losses plus outstanding losses equal incurred losses.

PERILS EXCLUDED
Many insurers exclude flood and earthquake damage in their basic property form, but allow the purchase of coverage by endorsement. Insurers also exclude losses that they consider normal business expenses, such as wear and tear or settling and expansion of foundations. Other exclusions can be addressed by adding an endorsement to the basic policy form, or by purchasing different types of property insurance. Boiler and Machinery Insurance and Crime Insurance are two such examples.

PERILS
Perils are the causes of loss, such as fire or windstorm, which a policy covers. Property insurance can be written on a "Named Perils" basis (i.e., specified types of perils). However, it is more common today to use an "All Risk" format (often called Special Form). "All Risk" means that the policy covers all risks of direct physical damage, except those specifically excluded in the policy.

PERSONAL INJURY
Unintentional slander, libel, false arrest, or wrongful entry.

PERSONAL PROPERTY
All property except land, buildings, and other structures attached to the land. Examples of personal property include merchandise, furniture, supplies, stock, and inventory.

PHYSICAL HAZARD
The material, structural, or operational features of a business that may create or increase the opportunity for injury or damage.

POLICY
A written contract of insurance.

POLICY TERRITORY
Specifies the geographic area where the property must be damaged (i.e., inland marine policies) or where injury or damage must occur (i.e., liability policies) for coverage to apply.

POLICYHOLDER
A person or organization protected by an insurance contract. Synonymous with "Insured."

POLLUTION
The contamination of an environment by substances regarded as pollutants. Liability from pollution is normally excluded to some degree by the general, auto, and umbrella liability policies. Insurers have now inserted strict exclusionary language into these policies, making it necessary for Insureds to seek coverage under separate "environmental impairment liability" policies.

PRECEDENT
A case that provides guidance or authority.

PREJUDGMENT INTEREST
Interest accruing on the amount of a legal award from the time of the injury or damage to the time the judgment is entered by the court. Prejudgment interest, when awarded as part of a judgment against the Insured, is covered by the Supplementary Payments provision of standard general liability policies.

PREMISES AND OPERATIONS LIABILITY
Liability arising from the Insured's premises or operations in progress, on or off the premises.

PREMISES
The insured building(s), the insured personal property, and any insured property immediately adjacent are considered the "premises."

PREMIUM
The periodic payment required to keep an insurance policy in force.

PRIMARY INSURANCE
Provides coverage up to a specified amount or against specific perils.

PRIVILEGED COMMUNICATION
Communication during "special" relationships that is protected from disclosure to third parties. The most common protected relationships are those of attorney/client, cleric/penitents, and husband/wife.

PRO RATA CANCELLATION
The termination of an insurance contract or bond with the premium charge being adjusted in proportion to the exact time the protection has been in force.

PRODUCTS AND COMPLETED OPERATIONS LIABILITY
Liability arising out of the Insured's products or business operations conducted away from the Insured's premises once those operations have been completed or abandoned.

PRODUCT
"Product" is defined in the standard Insurance Services Office, Inc. (ISO) commercial general liability policies as property (other than real property) that is manufactured, sold, handled, distributed, or disposed of by the Named Insured or others involved with the Named Insured in the stream of commerce. The definition of "product" includes containers, parts and equipment, product warranties, and provision of or failure to provide instructions and warnings.

PROGRAM BUSINESS
Groupings of insurance customers or applicants with common operations that often form associations or risk purchasing groups.

PROOF OF LOSS
A formal statement made by the Insured to the insurer regarding a claim so the insurer may determine the liability under the policy or bond.

PROPERTY & CASUALTY INSURANCE
One of the three larger classifications of insurance (the other two are Life, Health & Accident, and Surety & Bonds. "Property & Casualty" refers to the group of coverages that include property, crime, liability, auto, workers' compensation, and errors and omissions.

PROPERTY DAMAGE
As defined in the general liability policy, property damage is destruction of tangible property, including the resulting loss of use, as well as the loss of use of tangible property that has not been damaged.

PROPERTY INSURANCE
First-party insurance that indemnifies the owner or user of property for its loss (or the loss of its income-producing ability) when the loss or damage is caused by a covered peril.

PROVISION
Any statement in an insurance policy.

PROXIMATE CAUSE
A legal concept often applied by courts in determining whether an injury or loss damage has been caused by an Insured peril. A number of different definitions have been used, including the primary cause of loss or damage; the cause without which a given result would not have occurred; and the cause that sets other causes in motion.

PUNITIVE DAMAGES
Damages in excess of those required to compensate the plaintiff for the wrong done, which are imposed in order to punish the defendant because of the particularly wanton or willful nature of his or her wrongdoing. Also called "exemplary damages."

RATING - GENERAL LIABILITY
General Liability policies are usually rated on area (office space), sales, and/or payroll. At the beginning of the policy year, the Insured supplies an estimate of the sales or payroll for the upcoming year. The initial premium is based on that estimate. At the end of the policy year, the insurer audits the actual payroll or sales figures and the premium is adjusted up or down accordingly. Policies are often subject to minimum premium requirements.

RATING - PROPERTY
Property insurance premiums are normally based upon the value of your property. Policies require that the values you report must at least be equal to a specified percentage (frequently 90%) of the values of your property. The rate is often expressed as a price per $100 of Insured value. Rating formulas are complicated, but they usually include the following considerations:

• Construction: Frame, brick, fire resistive, etc.
• Occupancy: The nature of the business(es) that occupy the building
• Protection: Within the building, such as a sprinkler system or watchman, as well as the quality of your community's Fire Department
• Exposure The risks to your property from the surrounding area, such as an adjacent woodworking plant or gas storage facility

Many buildings have a specific property insurance rate assigned by the Insurance Service Office. Subjective considerations, such as loss history, upkeep, and attitude towards loss prevention also play a role in the rating process. Larger policies have greater flexibility in rating than smaller ones.

REAL PROPERTY
Buildings and other structures attached to the land.

REINSTATEMENT
Putting a lapsed policy back in force by producing satisfactory evidence of insurability and paying any past-due premiums required.

RELEASE
To give up, abandon, and discharge a claim or an enforceable right against another party.

RENTAL CARS
Some auto insurers offer an endorsement that extends the auto liability coverage to include liability assumed under car rental agreements.

REPLACEMENT COST, REPLACEMENT COST VALUE
The current replacement cost of property is the amount it would cost to replace the property today using materials of the same kind and quality, with no deduction for depreciation. The replacement cost of real property does not include the value of the land, since the land itself will rarely be damaged.

REPRESENTATION
Statements made by applicants on their applications for insurance, which they represent as being substantially true to the best of their knowledge and belief but that are not warranted as exact in every detail. See Warranty.

RESERVATION OF RIGHTS
An insurer's notification to an Insured that coverage for a claim may not apply. Such notification allows an insurer to investigate (or even defend) a claim to determine if coverage applies (in whole or in part) without waiving its right to later deny coverage based on information revealed by the investigation. Although a reservation of rights protects an insurer's interests, it also alerts an Insured to the fact that some elements of a claim may not be covered, thereby allowing the Insured to take necessary steps to protect its potentially uninsured interests.

RESERVE
Refers to funds earmarked for specific purposes. Examples in the insurance industry are reserves for unearned premiums and reserves for losses in the process of adjustment.

RETENTION

1. Assumption of risk of loss by means of noninsurance, self-insurance, or deductibles. Retention can be intentional or, when exposures or not identified, unintentional.
2. In reinsurance, retention is the net amount of risk the ceding company keeps for its own account.

RETURN PREMIUM
The amount due the Insured if the actual cost of a policy is less than what the Insured had previously estimated or if the policy is cancelled. If, for example, the policy limits are reduced, the actual exposure is less than what was estimated at the beginning of the policy year, and a return premium would be due.

RISK

1. Any chance of loss.
2. The Insured or the property to which the insurance policy relates.

RISK CONTROL
The technique of minimizing the frequency or severity of losses with training, safety, and security measures. Also known as "loss control."

RISK MANAGEMENT
The practice of identifying and analyzing loss exposures, and taking steps to minimize the financial impact of those risks.

RISK MANAGEMENT PROCESS
A system for treating risk, which involves the following steps:

1. Identification and analysis of exposures
2. Selection of appropriate risk management techniques to handle exposures
3. Implementation of chosen techniques
4. Monitoring of the results

RISK MANAGEMENT TECHNIQUES
Methods for treating risk, including retention, contractual or noninsurance transfer, loss control, avoidance, and insurance transfer.

RISK MANAGER
The individual responsible for preserving a firm's assets against accidental losses of various kinds. Risk managers buy insurance, promote sound loss control, and manage retention (self-insurance) programs for the organization. Large firms may have a risk management department involving many employees, while small organizations usually have a single person who performs risk management duties, as well as other tasks.

RISK PURCHASING GROUP
A group formed in compliance with the Risk Retention Act of 1986 authorizing a group of Insureds engaged in similar businesses or activities to purchase insurance coverage from a commercial insurer. This is in contrast with a risk retention group, which actually bears the group's risks, rather than obtaining coverage on behalf of the group members.

RISK REDUCTION
A risk control activity focusing on reducing the severity of losses. Examples include building firewalls to reduce the spread of fire and installing automatic fire sprinklers.

RISK RETENTION
Planned acceptance of losses by deductibles, deliberate noninsurance, and loss-sensitive plans where some or all of the applicable risk is consciously retained rather than transferred.

RISK SELECTION
The method a home office underwriter uses to choose applicants that the insurance company will accept. The underwriter must determine whether risks are standard, substandard, or preferred and set the premium rates accordingly.

RISK TRANSFER
A risk management technique whereby risk of loss is transferred to another party through a contract such as a hold harmless agreement to a professional risk bearer, such as an insurance company.

1. Property after it has been partially damaged by an Insured peril.
2. As a verb, to save endangered property and to protect damaged property from further loss.

SCHEDULED LIMITS
Separate property insurance limits applicable to each type of covered property interest (e.g., building, personal property, business interruption, etc.) at each covered location. Scheduled limits contrast with blanket limits, which apply over more than one covered property interest or more than one location or both. Also called "specific limits."

SEASONAL RISK
A business that operates during only a part of the year (such as a ski resort) or that experiences seasonal peaks of production or income (such as a toy manufacturer).

SELF INSURANCE
A system whereby a firm sets aside an amount of monies to provide for any losses that occur that would ordinarily be covered under an insurance program. The monies that would normally be used for premium payments are added to this special fund for payment of losses incurred.

SEVERABILITY OF INTERESTS CLAUSE
A policy provision clarifying that the insurance applies to each Insured as though a separate policy were issued to each (except with respect to the coverage limits). A policy containing such a clause, therefore, will cover a claim made by one Insured against another Insured.

SEVERITY
The amount of damage that is (or that may be) inflicted by a loss or catastrophe. Sometimes quantified as a "severity rate," which is a ratio relating the amount of loss to values exposed to loss during a specified period of time.

SHORT RATE CANCELLATION
Refers to the cancellation of an insurance policy by the Insured prior to the expiration date. Short-rate cancellations generally result in a penalty in the form of a less than full pro-rata premium refund. See also Pro Rata Cancellation.

SOFT MARKET
One side of the market cycle characterized by low rates, high limits, flexible contracts, and high availability of coverage. Contrast with "hard market."

SPECIAL CAUSES OF LOSS FORM (ISO)
One of the four Insurance Services Office, Inc. (ISO) causes of loss form. An ISO commercial property policy must include one or more causes of loss forms. The Special Causes of Loss form (CP 10 30) provides what is commonly referred to as "all risks" coverage, which is coverage for loss from all causes not specifically excluded.

SPECIAL DAMAGES
Objectively assessed monies awarded to an injured party for tangible losses, such as wage loss, loss of use, nursing care, and medical expenses.

STANDARD RISK
Entity or person who, according to a company's underwriting standards, is entitled to insurance protection without extra rating or special restrictions.

STATUTE OF LIMITATIONS
A law prescribing the period within which certain types of causes of action must be brought. This time period usually begins when the injury or damage occurs (or is discovered). The statute may run from 1 to 6 years. In the case of a minor, the statute of limitations begins from the date he or she reaches legal age.

STATUTORY LAW
That body of law that is enacted by legislative bodies. It is separate and distinct from common law.

STRICT LIABILITY
A legal doctrine under which liability is imposed with respect to injury or damage arising from certain types of hazardous activities.

SUBMISSION
The package of materials that is sent to the underwriter as part of a request for a quotation of insurance. An application is usually the most important part of the submission.

SUBPOENA
A command to appear at a certain time and place to give testimony.

SUBROGATION
The assignment to an insurer by terms of the policy or by law, after payment of a loss, of the rights of the Insured to recover the amount of the loss from one legally liable for it.

SUBROGATION WAIVER
An agreement between two parties in which one party agrees to waive subrogation rights against another in the event of a loss.

SUMMARY JUDGMENT
A court judgment based on the judge's conclusion that the litigation involves only a question of law with no associated questions of fact. Disputes as to the meaning of insurance policy provisions, when they involve only the interpretation of the policy itself and not the determination of the circumstances of the loss, are often the subject of a summary judgment.

SUMMONS
Instrument used to commence a civil action or special proceeding and as a means of acquiring jurisdiction over a party. The process is directed to a sheriff or other officer, requiring the sheriff to notify a person named that an action has been commenced against him or her.

SURPLUS LINES
Risks placed with nonadmitted insurers.

SURPLUS LINES INSURANCE
Refers to coverage lines that need not be filed with state insurance departments as a condition of being able to offer coverage. The types of risks typically insured in the surplus lines insurance markets can usually be categorized as risks with adverse loss experience, unusual risks, and those for which there is a shortage of capacity in the standard market.

TERM OF POLICY
The period for which the policy runs. In term life insurance, this is to the end of the term period.

TERRORISM RISK INSURANCE ACT (TRIA)
Federal law passed in 2002 encompassing three elements:

1. Availability: Insurers are generally required to "make available" coverage for losses resulting from acts of terrorism on the same terms and limits as coverage for other losses.
2. Disclosure: The Act requires insurers to disclose the premium charged for the terrorism losses in all new and renewal quotes and policies.
3. Federal participation: The federal government will share in certain terrorism losses through 2005. To trigger the federal backstop, the "certified" terrorism events in any one calendar year must result in significant losses.

THIRD PARTY ADMINISTRATOR
A firm that handles various types of administrative responsibilities on a fee-for-services basis for organizations involved in cash flow programs. These responsibilities typically include claims administration, loss control, risk management information systems, and risk management consulting.

TORT
A civil or private wrong that gives rise to legal liability.

TRIAL COURT
The court assigned to preside over a trial, and in some instances discovery of a particular case.

TRUSTEE
A person appointed to manage the property of another.

True umbrella policies are broader that the underlying policies. This means they provide some coverages that the underlying policies do not. Umbrella coverage is often subject to a "retention" when there is no coverage in the underlying policies. In other words, the umbrella insurer will only pay such claims when they exceed a certain dollar amount.

"Excess" policies do not add additional coverages. They simply provide additional amounts of insurance over the underlying policies. Since portions of the underlying General Liability and Employer's Liability policies limit the amount they will pay in any one-policy year (i.e., aggregate limit), these policies should have the same policy term (i.e., expiration date) as the umbrella policy.

UNDERLYING COVERAGE
With respect to any given policy of excess insurance, the coverage in place on the same risk that will respond to loss before the excess policy is called on to pay any portion of the claim.

UNDERLYING POLICIES
Policies occupying layers of coverage below the particular policy being referred to. For example, a general liability policy and an umbrella policy might be underlyers for an excess liability policy.

UNDERWRITER
The insurance company receiving premiums and accepting responsibility for fulfilling the policy contract. Also, the company employee who decides whether the company should assume a particular risk; or the agent who sells the policy.

UNDERWRITING GUIDELINES
A set of rules and requirements an insurer provides for its agents and underwriters. The underwriter uses these guidelines to make decisions regarding the acceptance, modification, or rejection of a prospective Insured.

UNILATERAL CONTRACT
A contract in which only one party makes an enforceable promise. Most insurance policies are unilateral contracts in that only the insurer makes a legally enforceable promise to pay covered claims. By contrast, the Insured makes few, if any, enforceable promises to the insurer. Instead, the Insured must only fulfill certain conditions, such as paying premiums and reporting accidents, to keep the policy in force.

UNINSURABLE RISK
One not acceptable for insurance due to excessive risk.

VENUE
The location (e.g., place or county) where an action is brought for trial.

VICARIOUS LIABILITY
The liability of a principal for the acts of its agents. Vicarious liability can result from the acts of independent agents, partners, independent contractors, and employees.

VOIDABLE
A policy that can be made void at the option of one or either of the parties to it.

VOID
Without legal effect or unenforceable. A number of actions on the part of the Insured can render coverage under an insurance policy void.

WARRANTY

1. A guarantee of the performance of a product.
2. A statement of fact given to an insurer by the Insured concerning the insured risk, which if untrue, voids the policy.

WITH PREJUDICE
The opposite of without prejudice; it is meant as a final judgment of dismissal with the result as conclusive as if the action had been prosecuted to final adjudication adverse to the plaintiff.

WITHOUT PREJUDICE
When an offer or a dismissal is made "without prejudice," it is meant as a declaration that no rights of the party concerned are to be considered as waived or lost. A dismissal without prejudice allows a new suit to be brought on the same cause of action.