Insurance Glossary P-W

P

Pair or Set Condition... Loss settlement condition found in property insurance contracts that states that when part of a set is damaged or destroyed, the insured will be reimbursed for the value of the entire set.

Payment Bond... Type od Surety bond that guarantees bills for labor and materials will be paid to the contractor as they are due. Also called Labor And Materials bond.

Peak Season Endorsement... Endorsement attached to the Commercial Property coverage part to provide increased coverage during particular seasons of the year when the insured's inventory is at higher levels than usual.

Performance Bond... Type of Surety bond that guarantees that jobs will be completed by the contractor according to the contract specifications.

Permitted Incidental Occupancies Endorsement... Homeowners policy endorsement that covers the insured's business activities conducted on the residence premises.

Personal Articles Form... Personal Inland Marine form that provides scheduled coverage for nine optional classes of personal property: jewelry, furs, cameras, musical instruments, silverware, golf equipment, fine arts, stamp collections, and coin collections.

Personal Auto Policy... Auto policy that provides Property and Liability coverage for both owned and nonowned autos used, maintained or operated by the insured and his or her family members.

Personal Effects Form... Personal Inland Marine form that covers an insured's personal belongings, such as baggage, while traveling.

Personal Injury... Injury other than bodily injury arising out of such things as libel, slander, false arrest, wrongful entry, violation of privacy, and malicious prosecution.

Personal Property Replacement Cost Endorsement... Homeowners policy endorsement that adds replacement cost coverage for personal property.

Physicians And Surgeons Equipment Form... Filed Commercial Inland MArine form that covers medical instruments on and off the premises and office furniture and fixtures at the doctor's office against direct physical loss.

Policy Limit... Maximum amount the insurance will pay for a particular loss, or for losses sustained during a period of time. Also called limit of coverage, limit of insurance and limit of liability.

Position Schedule Bond... Fidelity bond that covers specifically named positions in the company, rather than the individuals that hold the positions.

Postjudgment Interest... Interest accruing on a judgment after an award has been made, but before payment is made by the insurance company. Usually covered as a supplementary payment in Liability policies.

Prejudgment Interest... Interest awarded to compensate a third party for interest he or she might have earned if compensation had been received at time of injury or damages, rather than at the time of judgment.

Premium Audit... Survey of the insured's financial records to gather information used to calculate the premium, such as exposures and limits.

Products And Completed Operations... Business liability exposure arising out of defects in the company's products or completed operations.

Professional Liability Policy... Insurance coverage issued to a professional that covers the rendering or failing to render services of a professional nature. Policies are tailored to fit specific occupational needs.

Property Damage (PD)... Damage to or destruction of property, including loss of use of the property.

Public Official Bonds... Type of Surety bond furnished by principals who are elected or appointed to fill positions of trust that guarantee their faithful and honest performance in office.

Punitive Damages... type of damages intended to punish the defendant and make an example out of him or her to discourage others from behaving the same way. Also called exemplary damages.

R

Reasonable Person Rule... principle of law that states that each person must behave like a prudent person, following those ordinary considerations that guide human affairs.

Rebating... Giving or offering some benefit other than those specified in the policy to induce a customer to buy insurance. Rebating is illegal in most states.

Replacement Cost... The cost to replace a damaged or destroyed item of property, without deduction for depreciation. May be the basis of reimbursement for a loss.

Representation... Statements on an insurance application that the applicant believes are true. A representation is not considered a matter to which the parties contract, so a policy cannot be voided on the basis of representation.

Retroactive Date... Under the claims-made Commercial General Liability (CGL) form, a date stipulated in the Declarations as the first date on which an event may occur and be covered by the policy if a claim is filed.

S

Salvage... Damaged property that can be retrieved, reconditioned and sold to reduce an insured loss.

Scheduled Coverage... Property that is specifically listed in the Declarations and covered for a specific amount. Also called specific insurance.

Self Insurance... Alternative to purchasinf insurance where a company or individual assumes the risk of paying for its losses and sets aside the neccessary funds to pay for such losses.

Signs Coverage Form... Filed Commercial Inland Marine form that insures businesses against loss to neon, fluorescent, automatic, or mechanical electric signs and lights.

Specific Causes Of Loss... One of the physical Damage coverage options in the Commercial Auto coverage forms; provides more limited coverage Comprehensive coverage, insuring only against specified perils such as fire, flood or explosion.

Spoilage Endorsement... Endorsement used with the Building And Personal Property and Condominium Commercial Unit-Owners Commercial Property coverage forms. It adds coverage for the insured's perishable stock-- personal property that must be maintained under controlled conditions to protect it from loss or damage.

Statue Of Limitations... Law that provides that certain types of suits must be brought within a specified time of the occurance to be valid under the law.

Supplementary Payments... Provides extra coverage over and above the insured's limit of liability. Commonly included are defense costs, first aid expenses, bond premiums, and postjudgment interest.

Supply Bond... type of Surety bond that guarantees that a supplier will furnish supplies, products or equipment at an agreed-upon time and place.

Surety Bond... Bond that guarantees that someone will perform faithfully whatever he or she agrees to do, or that someone will make an agreed-upon payment to another party.

T

Theatrical Property Coverage Form... Filed Commercial Inland Marine form that covers scenery, props and costumes used by a theater group in a specific production.

Tort... A civil wrong for which monetary damages may be provided. Does not include losses arising out of contracts.

Towing And Labor Cost Endorsement... Personal Auto policy endorsement that covers towing and costs of labor performed at the site the car was disabled. Coverage is normally limited to $50 - $75 per occurance.

Twisting... illegal activity in which an agent convinces a prospect to cancel existing insurance and buy another policy from the agent, to the detriment of the prospect.

U

Umbrella Policy... Type of policy that provides broad coverage for an insured's liability over and above liability covered by an underlying contract. May also cover losses that are excluded by the underlying policy. Available as commercial or individual insurance.

Underinsured Motorists Coverage... Auto coverage that pays the difference between the insured's actual damages for bodily injury and the amount of liability insurance carried by the at-fault driver.

Uninsured Motorists Coverage... Automobile coverage designed to provide protection for the insured if he or she is involved in an accident in which an uninsured motorist is at fault. Uninsured motorists include those who do not carry insurance, motorists whose insurance does not meet the states minimum financial responsibility laws, drivers whose insurance companies are insolvement, and hit-and-run drivers who cannot be identified.

V

Vacancy... The absense of both people and property from a premises. Property coverage is often restricted when there are long periods of vacancy.

Valuable Papers And Records Insurance... Filed Commercial Inland Marine form that provides coverage for valuable papers such as manuscripts, blueprints, records, and other printed documents.

Valued Policy... Policy written for a specified amount that lists the value of the insured property as agreed to by both the insured and the insurer. This amount is used to value losses. Also called Agreed Amount Policy.

Vandalism And Malicious Mischief (V&MM)...Coverage provided in many Property insurance policies that protects property against damage caused by vandals.

Vicarious Liability... Liability that a person or business incurs because of the action of others, such as family members or employees.

W

Warranty... A specific agreement between the insured and the insurer that becomes a part of the insurance policy. A breach of warranty can void the insurance policy.

Watercraft Endorsement... Homeowners policy endorsement that provides coverage for Bodily Injury or Property Damage arising out of the use of watercraft.

Watercraft Package Policy... Package policy that provides Property, Liability and Medical Payments coverage for losses arising out of the ownership, maintenance or use of watercraft.

Workers Compensation And Employers Liability Policy... Insurance that covers an employer's obligations under Workers Compensation laws, which make the employer responsible for stated damages in the event of a work-related injury or illness.