A sudden, unintended, unforeseen and unexpected event. To be insurable, a loss must be accidental with respect to acts of the insured.

Act of God

An unexplained happening contributed to a superior or natural force which is unpredictable and without human intervention.

Actual Cash Value

Under some contracts the amount of loss payables is determined by subtracting an amount for depreciation from the replacement cost (new) of the damaged or destroyed property. (ACV = RC – D).


Individual employed by a properly and casualty insurance company or an individual to settle on its behalf claims brought by insureds. The adjuster evaluates the merits of each claim and makes recommendations to the insurance company.


An insurance agent is a person who acts on behalf of that insurance company with whom he or she is engaged. They may be a “Captive” or “Exclusive” agent which means they represent only one company, or they may be “Independent” agent which means they can represent more than one company.

Aggregate Limit

This is the total amount an insurer will pay for all covered losses during a specific period for a particular coverage.

All Risk

The term “All Risk” means there is coverage for all perils except those specifically excluded.


A contract for temporary insurance issued either in writing or orally pending issuance of a policy of insurance.


A person who acts or aids in soliciting, negotiating and procuring insurance on behalf of an insured. However, in the collection of insurance premiums the broker is deemed to be an agent for the company.

Builders Risk Insurance

Insurance designed to cover buildings in the course of construction. See our Builders Risk Insurance page for more.


Request by an insured for indemnification by an insurance company for loss incurred from an insured peril.


This is the failure of an applicant for an insurance policy to reveal facts that are known. This can void the insurance contract whether the concealment was intentional or unintentional.


A provision which sets forth the rights, duties and responsibilities of the parties to an insurance contract. They may be found anywhere in the policy.


Protection under an insurance policy. In property insurance, coverage lists perils insured against properties covered, locations covered, individuals insured, and the limits of indemnification. In life insurance, living and death benefits.


Section of insurance contract which sets forth information that identifies the parties to the contract, what is covered, where, when, and at what limits, as well as rates and premiums.


A deductible serves to reduce the policy premium because the insured absorbs the small losses.

Effective Date

The date that coverage starts under an insurance contract.


An attachment to an insurance policy which is used to clarify, extend, or restrict coverage.


This is a limitation or restriction of the coverage granted by the insuring agreement of an insurance contract.

Flat Cancellation

This type of cancellation means that the policy was cancelled without charge, by agreement.

Flat Rate

An insurance rate which is used without any requirement that the coverage be in relationship to value.


This form provides coverage for those goods for which it is difficult to establish s specific location.


This involves intentional deception which results in injury to another party.

Gross Premium

Total amount paid by insured.

Inception Date

The date that an insurance contract becomes effective.

Insurable Interest

A person is deemed to have an insurable interest in property when he has a lawful, substantial, economic interest in the preservation of the property. To collect under an insurance policy, an insured must have at the time of loss or damage an insurable interest in the property.


A social device for reducing economic risk whereby many members of a group collect funds to pay the losses of a few of the members of the group.


The individual or organization for whom insurance protection is provided by an insurance policy.


Company offering protection through the sale of an insurance policy to an insured.


Legal obligation to perform or not perform specified acts(s).

Liability Insurance

Provides protection from lawsuits of others.

Minimum Premium

The minimum amount an issuer will accept to issue a policy even if the gross premium is a lesser amount.

Named Insured

The individual(s) or organization(s) who the declaration section of an insurance policy specifically names as the insured.


A tort, a civil wrong not based upon a contract. It is the failure to act as a reasonable and prudent person would have done in similar circumstances, i.e. the careless invasion by one party of the personal or property rights of another party.


A situation which exists over a period of time as opposed to an accident which can be fixed in time. It’s an accident which can be the result of a repeated and continuous exposure to the same general harmful conditions.

Policy Limit

The policy limit is the dollar amount of coverage shown in the contract.

Policy Period

This is the period of time a policy is in effect.


The premium is the money consideration which the insured pays for the undertaking of the insurance company.

Proof of Loss

A written document which must be filled by an insured when a loss occurs under a property insurance policy.

Pro-Rata Cancellation

When a policy is cancelled and there is no penalty charged against the premium to be returned.


Restoration of a policy that has lapsed because of non-payment of premium after the grace period has expired.

Short Rate Cancellation

This is a cancellation with a penalty. Generally, when the insured cancels, it is on a short-rate basis. (Exceptions: insured going into the military or when insured cancels and reinsures in the same company).

Termination Date

The date that coverage expires on an insurance contract.

Waiver of Subrogation

The relinquishment by an insurer of the right to collect from another party for damages paid on behalf of the insured. The waiver of subrogation condition in current standard policies is referred to as “transfer of rights of recovery.”