Glossary of Risk Management and Insurance Terms

May 2014 26 | Posted by naomi.whatley

A

Absolute Liability: Liability arising from extremely dangerous operations. For example, builders would be liable for damages caused by vibrations after detonating an explosive. Claimants usually do not need to establish that the operation is dangerous. (See Strict Liability)

Accident: An unforeseen, unintended event.

Accounting (Book) Value: A standard used to determine the value of property exposures based on the original cost of property minus depreciation.

Acts Of Man: Property damage usually resulting from theft, vandalism of other acts.

(See Acts of Nature.)

Acts Of Nature: Also known as “Acts of God,” is property damage caused by natural

catastrophes such as tornadoes, hurricanes, earthquakes, floods, strong winds, hail and

lightning.

Actual Cash Value: The fair and reasonable cash price for which a property could be sold in the market in the ordinary course of business of business and not at a forced sale.

Additional Insureds: Other parties in a contract agreement in addition to the primary

named insureds.

Admitted Company: An insurance company licensed to do business in a given state.

Adverse Selection: A principle that states that those who believe that they are most likely to incur a loss will be most likely to buy insurance.

Agent: One who solicits, negotiates or effects a contract or insurance on behalf of an insurer. (See Broker.)

Aggregate Limits: The total amount recoverable from an insurance policy period

regardless of how many separate claims are made on a single project. (See Limits)

Agreed Amount: A provision in an insurance policy whereby the coinsurance clause is

suspended if the insured carries a certain amount of insurance, usually 90 percent or more of the value of the property covered by the policy.

Allegations: Assertions that a party in a suit, claim or complaint is attempting to prove.

All-Risk Insurance Contracts: Policies that insure against all losses that are not specifically excluded. (See Named-Peril Insurance Polices.)

Annuity: An agreement by an insurer to make periodic payments for a specified period, usually for the remainder of the beneficiary’s life.

Arson: Intentional destruction of property by fire.

Associate in Risk Management (ARM): A professional designation awarded by the Insurance Institute of America.

Attractive Nuisance: A dangerous object or situation that may be attractive to certain

persons, especially children.

A.M. Best Co. Ratings: Ratings used to evaluate insurance companies, also known simply as “Best’s ratings”. A.M. Best is one of several rating services.

Automobile Insurance: Protects the insured against losses involving automobiles.  Coverage can be purchased to cover several kinds of losses including bodily injury liability or collision and comprehensive coverage.

Avoidance: Intentionally not engaging in activities that have been determined to be too

great a risk.

B

Basic Extended Reporting Period: The 60-day and five-year extended reporting periods provided to insureds under the 1986 ISO claims-made CGL policy when a claims-made policy is cancelled.

Basic Limits: The minimum limits of coverage that can be purchased for a specific policy.

Benefits: Compensation for loss and other services provided to a policyholder by an

insurer under the terms of the policy.

Binder: A legal agreement by an insurance company to provide coverage. The agreement is temporary pending the writing of a formal policy.

Blanket Bonds: Fidelity bonds that pay for losses resulting from dishonest acts of all

employees. (See Named-Schedule Bonds.)

Blanket Position Bonds: Fidelity bonds that pay up to a specified limit to employers for each individual employee’s acts of dishonesty. (See Commercial Blanket Bonds)

Bodily Injury Liability: Liability from a physical injury or death of a person. (See Personal Injury Liability.)

Boiler and Machinery Insurance: Covers losses to all pumps, blowers, power stations,

motors, and engines, settling tanks, aerators, boilers, coolers and heaters. It also covers

damage to other property caused by the equipment failure and for losses due to interruption in business.

Bond: A policy that guarantees the performance of a contract or the honesty of employees.

Breach Of Contract: The failure to live up to conditions in a contract without having a legal excuse.

Broad Form: An insurance policy that provides coverage beyond standard coverages.

Broker: An independent representative who seeks and negotiates insurance coverage on behalf of an insured. (See Agent.)

Builders’ Risk Insurance: Coverage usually carried by a building contractor as a contractual requirement. It provides coverage for a broad range of exposures from the

materials and labor involved in a construction project.

C

Cancellation Provisions: Conditions providing for the cancellation of an insurance policy before the termination date. It usually requires each party to notify the other within a certain period before cancellation.

Capacity: The highest amount of insurance available from an insurance company. It can also refer to the highest amount of insurance available in the marketplace.

Captive: An insurance company that is a subsidiary of another company for which it

provides insurance. It may be owned by and write policies for several companies that have common risks.

Carrier: An insurance company. (See Insurer.)

Catastrophic Loss: A large loss from a peril. For example, a catastrophic loss can

come from a hurricane or a tornado.

Certificates of Insurance: Written verification from an insurance company that coverage exist. It usually includes the names of the insureds, policy amounts, and

policy period.

Chartered Property Casualty Underwriter (CPCU): A professional designation awarded by the Insurance Institute of America.

Claim: A demand for compensation for a loss.

Claimant: Person or organization that demands compensation for a loss.

Claims-Made Coverage: An insurance policy providing liability coverage only if a claim

is made during the policy period, regardless of when the loss occurred. (See Occurrence Coverage.)

Clean Air Act: Federal legislation that regulates the release of harmful substances into the atmosphere.

Clean Water Act: Established standards for treating wastewater.

Coinsurance: An insurance policy provision requiring the insured to carry an amount of insurance coverage that is equal to a certain percentage of the value of the property

that is covered under the policy.

Commercial Blanket Bonds: Fidelity blanket bonds that pay an employer a specified limit for each occurrence of dishonesty by employees. (See Blanket Position Bonds.)

Commercial General Liability (CGL): A broad form of liability insurance that generally covers bodily injury and property damage claims but not auto claims.

Compensatory Damages: Judgement awards that include actual losses or injuries as well as amounts for expenses, loss of time, and suffering, but not punitive damages.

Comprehensive Environmental Response, Compensation & Liability Act

(CERCLA): Also known as Superfund, was enacted to set standard for identifying and cleaning up hazardous waste sites. It also established a federal cleanup fund.

Comprehensive General Liability: See Commercial General Liability.

Conditions: Provisions of an insurance policy that state the rights and duties of insureds and insurers.

Confined Space Entry: Any area that allows the concentration of toxic gases or precludes an atmosphere that can support life.

Consent-to-Settlement: Conditions found in very few insurance forms, which allow a

jurisdiction to have some input in setting law enforcement suits. The provisions allow the

Jurisdictions to protest an untimely or ill-advised settlement offer.

Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA): Requires employers to continue health benefits to employees who have ended employment for

reasons other than dismissal. Benefits must be extended for 18 to 36 months and may

be provided at the employee’s cost.

Consolidated Rating: An A.M. Best Co. rating for two or more insurance companies owned by a parent company. The rating is based on the combined performance of the parent and its subsidiaries.

Contingent Expense: Additional expenses incurred in order to function normally or to maintain services after a loss. For example, if abridge were destroyed during a storm,

contingent expenses would include the costs of cleaning up any debris and rerouting

traffic.

Contingent Liability: Liability imposed on the insured because of activities of persons

other than employees, such a contractors. (See Vicarious Liability.)

Contingent Rating: An A.M. Best Co. rating indicating that an insurance company experienced decline in profitability, leverage or liquidity but the decline was not substantial enough to warrant a reduced rating.

Contractual Liability: Duties and responsibility assumed through a contractual relationship for products or services.

Contributory Negligence: Used as a defense in negligence suits, it refers to the

plaintiff having contributed or added to his or her own injury.

Copayment: A policy provision requiring the insured to assume a portion of each loss over the deductible. For example, under an insurance policy provision, a local

government could be responsible for paying a copayment of 5 percent of every claim above a $5,000 deductible, while the insurance company would be responsible for

paying the other 95 percent of the claim.

Cost-of-risk: Total costs associated with loss exposures, including insurance premiums,

deductibles and uninsured losses, costs of loss prevention services, and general risk management expenses.

Coverage: The type of protection provided by an insurance policy.

Coverage Territory: The geographical area covered under an insurance policy.

D

Damages: The amount of money required to pay for a loss.

The Davis-Bacon Act: Required payment of prevailing wages for work done on federally funded construction projects.

Declaration: Part of an insurance policy that states factual information such as the

name and address of the insureds, location and description of the property to be insured,

policy period, coverage limits, and premiums.

Deductible: Amount of a loss to be paid by the injured before an insurance policy pays.

Defamation: Holding up a person to ridicule, scorn or contempt. It may be either a criminal or civil violation.

Defense Clause: A liability policy agreement whereby the insurance company agrees to

defend all suits against the insured, with respect to the coverage limits provided in the policy. The defense cost is in addition to the liability limits set forth in the policy.

Defense Upon Allegation: An exception to insurance policy coverage exclusions for

fraud, dishonesty and similar acts. It ensures that defense will be provided for these

allegations and that damages and damage payments will be excluded for officials and employees who allegedly knew of or participated in the acts.

Difference-in-Conditions Contracts: Contracts that can be negotiated to expand or

supplement named-peril insurance so that it covers insureds on an all-risk basis.

Discovery Period: The time an insured has to identify and report losses during the period of a policy of bond.

Duties and Notification Requirements: Set by insurance companies for insureds to perform certain acts in the event of loss or to notify the company of a loss within a certain period in order for coverage to be in effect.

Duty Owed: An obligation to take some action to prevent harm to another. There may

be no liability for this obligation depending upon the circumstances and the relationship of the parties to each other.

E

Easement: An agreement by a landowner entitling another party to use his or her land.

Effective Date: Date that an insurance policy goes into effect.

Employment –at-Will: An employment policy stating that employers can fire workers without justifiable reason. Many employers hire workers on a three- or six-month

probation period in which employees work on employment-at-will basis. (See Termination-for-Cause.)

Endorsement: An amendment to an insurance policy that in some way modifies the

original contract provision. (See Rider.)

Errors and Omissions Insurance: A form of professional liability insurance that covers by employers or officials. (See Professional Liability Insurance.)

Excess Insurance: Coverage for losses that exceed limits for primary insurance. (See Primary Insurance.)

Exclusions: Items specifically not covered under a particular policy.

Exposure: the possibility of a loss.

Extended Reporting Period: Under a claims-made policy, provides coverage beyond the base of the policy period.

F

Fair Labor Standards Amendments of 1984 (FLSA): Standards of minimum wage and

maximum hours of work for all state and local government employees.

Fidelity Bonds: Protection for employers against losses caused by dishonest acts of

employees.

Fiduciary Liability: Responsibility of a person or organization that holds funds or

property of others in a position of trust.

First Dollar Coverage: Insurance coverage that pays all expenses, without a  deductible, up to the specified policy limit.

Force Majeure: An unexpected or uncontrollable event upsetting plans or releasing one from obligation.

Frequency: The chance that a loss will occur. Frequency is measured in terms of low,

moderate, or high chances.

Funded: Having the proper amount of funds to pay future liabilities.

G

Group Rating: An A. M. Best Co. rating for several insurance companies that share

common management or ownership, pool a substantial part of their business, and have

minor differences in their underwriting and operating performance. The rating reflects the combined performance of the group and all members receive the same rating.

H

Hard Market: An insurance marketing cycle when insurance is less affordable and less

available.

Hazardous Waste: Wastes that are specifically identified as being hazardous under

federal law. Also refers to wastes that are not identified by federal law, but show the

characteristics of being ignitable, corrosive, reactive, or toxic.

Health Maintenance Organization (HMO): A network of medical providers contracted by an employer to provide medical benefits to employees. Employees enrolled in an HMO must use network providers to receive benefits.

Historical Cost: A standard used to determine the market value of property exposures based on the original amount paid to acquire an item of property.

Hold-Harmless Agreement: A contractual arrangement in which one party assumes liability, thereby releasing the other of liability for specified losses arising out of a contractual relationship. Human Resources Losses. The cost to an employer for replacing a worker who is no longer employed because of a job-related illness or

injury. Human resources losses also include the costs to the employer for the

workers medical expenses and the decreased productivity while the worker is gone.

I

Indemnify: To restore a victim of a loss to the same position as before the loss occurred.

Indemnity Bond: A bond that indemnifies an obligee against loss due to a principal’s failure to perform as required.

Individual Responsibility: An arrangement of insurance pools in which each member pays for his or her own losses up to a specific amount, with an annual limit. Injunctive Relief: An action by a plaintiff seeking to have a court order a public entity to refrain from taking a particular action. For example, a plaintiff could seek injunctive relief for a local

government to stop building a road through his or her neighborhood.

Inland Marine Insurance: Originally developed to insure shipments that did not involve ocean voyages. It traditionally covers goods in transit and modes of transportation. Current policies cover diverse exposures such as electronic data processing equipment,

radio broadcasting equipment, bridges and tunnels.

Insurance: Method for paying for loses in which one party assumes the loss exposures of another party in exchange for premiums.

Insurance Guarantee Fund: Funds created under state law from contributions from

insurance companies operating in the state. The funds are used to make good any unpaid claims or to otherwise make money available to insurance companies near bankruptcy. They do not apply to nontraditional financing methods such as pools, risk retention groups, excess lines and surplus lines.

Insured: A party to an insurance arrangement who is protected against losses by an insurer.

Insurer: The party to an insurance arrangement who assumes the losses of the insured. (See Carrier.)

Insurer Agreement: The part of an insurance contract that outlines the protection provided by the contract in light of other conditions and exclusions found within the policy.

Intergovernmental Pool: ( See Pool.)

Inverse Condemnation: An attempt by a private party to recover property that was taken by the government for public use.

J

Joint and Several Liability: Also known as “deep pockets” liability, it permits recovery of losses from any of several codefendants based on their ability to pay rather than the

degree of their negligence.

L

Liability Insurance: Coverage that protects insureds from losses arising from their

responsibility to others, either imposed by law or assumed by contract.

Limits: Maximum amounts paid by an insurance policy. “Per occurrence” limits specify the amount that the policy will pay for each claim. “Aggregate limits: indicate the maximum amount that the policy will pay annually or during the policy term, regardless

of the number of separate occurrences or claims.

Loss: A loss of assets due to a risk. Also, the basis of a claim for damages under the

terms of a policy.

Loss Control: reducing the chance that a loss will occur or reducing the severity of losses that do occur.

Loss of Income: The result of any event that causes a temporary of permanent  disruption in operations resulting in a loss of revenue.

Loss Rating A method used to develop the prospective rate to apply to an exposure base.

Loss Ratio: Relationship of incurred losses to earned premiums.

Liquor Liability: Provide that a person serving alcohol to an intoxicated person or contributing to intoxication may be liable for injury to or damage caused by the

intoxicated person.

M

Malpractice Insurance: Insurance that is used to defend suits against professional

practitioners or pay damages set by a court for misconduct or lack of ordinary skill in

professional actions.

Market Value: The price of an item of property in its particular market.

Maximum Possible Loss: Predicts the greatest conceivable loss assuming that safety measures fail.

Maximum Probable Loss: The amount of loss that is most likely to occur in any given loss, assuming that all loss control efforts are effective.

McCarran-Ferguson Act P.L. 15): Passed in the 1940’s, it recognizes the system of states supervising and taxing the insurance industry but still allows Congress the right to exercise federal regulation of interstate insurance.

Motor Carrier Safety Act: A federal act establishing standards for vehicle safety.

Mutual Aid Agreements: Agreements between public agencies usually providing for assistance such as law enforcement, fire fighting, and emergency medical response.

Mutual Company: An insurance company owned and operated by and for its policyholders.

N

Named-Peril Insurance Contracts: insurance contracts that cover only perils that are named, defined, and limited in the policy. 

Named-Schedule Bonds: Also called individual fidelity bonds, cover employers for

losses caused by dishonest acts of specifically named employees. (See Blanket Bonds.)

Negligence: The failure to act as z reasonable and prudent person would under similar

circumstances.

Nonadmitted Insurer: An insurance company not licensed to do business in a particular state.

Notice of Occurrence: In a casualty insurance policy, refers to the insured’s duty to

properly notify the insurance company in the event of an occurrence.

O

Occupational Safety and Health Act of 1970 of (OSHA): A federal statute establishing safe and healthful working  conditions on a nationwide basis. Local governments are

exempt from federal regulations but must meet any state requirements. The act sets job safety and health standards that are enforced by Labor Department safety inspectors and provides for compilation of relevant work injury statistics.

Occurrence: An accident or event that results in injury or property damage.

Occurrence Coverage: An insurance policy that provides liability coverage only for injury or damage that occurs during the policy period, regardless of when the claim is filed. (See Claims-Made Coverage.)

Orientation: The first stage of personnel training providing general information about the organization, its policies, and its procedures.

P

Parent Rating: An A.M. Best Co. rating for an insurance company’s parent. It is based on the combined performance of the parent and the subsidiary.

Peril: The cause of a loss.

Personal injury Liability: Liability for an injury other than bodily injury usually resulting from false arrest or imprisonment, malicious prosecution, libel or slander, or violation of a

person’s right to privacy. (See Bodily Injury Liability.)

Personal Property: Any property that is not classified as real estate.

Physical Property: Includes real property such as buildings, grounds, and other real

estate, and personal property such as vehicles, tools, office equipment and furniture,

public records, and cash.

Policy: A contract between the insurer and the insured.

Policyholder: Person in possession of the insurance policy.

Policy Term or Policy Period: The dates that an insurance policy begins and ends.

Pool: Also known as risk sharing pool or insurance pool, a cooperative arrangement that

provides members with financial protection against losses. Pool members pay premiums

or contributions, receive coverage, and make claims as they would with traditional

insurance.

Pooled Rating: An A.M. Best Co. insurance rating for several companies under common management or ownership that pool 100 percent of their net business. All members receive the same rating.

Preferred Provider Organization (PPO): A group of health care providers that contracts with an organization to provide its employees health care at a reduced

fee.

Premium: The price of insurance protection for a specified loss exposure for a specified

period.

Primary Insurance: The first layer of insurance covering the first dollar of losses, often after a deductible, up to a specified limit. (See Excess Insurance.)

Prior Acts Coverage: Provides coverage under a claims-made policy for occurrences

before the policy period. Some policies provide limited prior acts coverage for a specified

number of years. Others provide full prior acts coverage for all occurrence regardless

of when they happened.

Professional Liability Insurance: Coverage that indemnifies the insured for any loss

sustained because of an error or oversight. (See Errors and Omissions Insurance.)

Prohibited Risk: Any class of business that will not be insured by an insurance  company under any conditions.

Property Insurance: Coverage protecting against loss or damage to physical property.

Property Valuation Methods: Ways to determine the value of real and personal property, useful for selecting a risk treatment method and for determining the

amounts and types of insurance needed.

Prospective Rating Plans: Insurance premiums quoted in advance as a flat figure or as an amount subject to audit. (See Retrospective Rating Plans.)

Proximate Cause: The cause of loss or damage. It must be an unbroken chain of

events starting with an occurrence of an insured peril and leading to an injury or property

damage.

 Public Officials Liability (POL): Liability assumed by appointed and elected officials. Claims usually allege civil rights violations and discrimination.

Punitive and Exemplary Damages: Judgement awarded beyond compensating the

plaintiff for property loss or injury caused by a defendant’s malicious conduct. These

damages are meant to punish the defendant and set an example for similar wrongdoers.

R

Rate: The cost of a unit of insurance. For example, the rate for property damage may

be a certain amount for every $1,000 of the property’s value. The premium is the rate

multiplied by the number of units.

Real Property: Real estate and buildings.

Reinsurance: Type of insurance purchased by insurers to spread all or part of the risk of loss to other insurance companies. In this way, insurers can share the cost of large losses.

Reinsured Rating: An A.M. Best Co. rating assigned to an insurance company that

reinsures 100 percent of its business.

Replacement Cost: A standard used to determine the value of property exposures

based on the amount needed to replace a lost, damaged or destroyed item of property, with a comparable item of property.

Reproduction Cost: A standard used to determine the value of property exposures

based on the cost of duplicating an item of property using skills and materials identical to

that of the original. This standard is generally used for items of historical or artistic

significance.

Renewal: A policy issued to renew an expired policy.

Resource Conservation and Recovery Act (RCRA): A federal act establishing standards for underground storage tanks, landfills and waste generators.

Retention: The amount of potential loss assumed by an organization. (See Self-insurance.)

Retrospective Rating Plans: Insurance rating plans in which final premiums are based on the insured’s loss experience during the coverage period, and final premiums are not

determined until the end of the period. This plan is usually beneficial for very large organizations. (See Prospective Rating Plans.)

Revised Rating: An A.M. Best Co. insurance rating that was revised during the year since the previous Best’s rating.

Rider: An attachment to an insurance policy that modifies the policy conditions (See

Endorsement.)

Risk: The chance or possibility or a financial loss.

Risk Control: The process of reducing or preventing losses.

Risk Evaluation: The process of assigning economic value to loss exposures.

Risk Financing: Making arrangements to pay for losses.

Risk Identification: Identifying services, properties, work practices, and other areas that could create losses.

Risk Management Information System (RMIS): A computerized information management systems developed for claims management, loss control, and other risk management data.

Risk Purchasing Groups: Organizations that enable members to buy insurance as a group to get better terms than they would as individual buyers.

Risk Sharing Pool: See Pool.

S

SARA Title III/the Superfund Amendments and Reauthorization Act: Established

requirement for state and local governments to organize plans for preventing and

responding to incidents involving extremely hazardous substances. It also established

reporting requirements for hazardous waste facility owners and operators.

Safe Drinking Water Act of 1974: A federal law that established standards for the quality

of drinking water.

Section 504 of the Rehabilitation Act of 1973: Mandates access for physically and mentally handicapped individuals to publicly owned operated facilities that are

supported by any federal funds.

Section 1983: See Title 42 of the U.S. Code Section 1983.

Self-insurance: The process of assuming and paying for losses instead of transferring

them to another organization such as an insurance company. It may be in the form of a

deductible, loss reserve, or no insurance. (See Retention.)

Self-insured Retention: The amount of a loss that the insured pays before the umbrella

carrier begins to pay for a loss that, although covered by the umbrella, is not covered

by the underlying liability insurance,

Soft Market: An insurance marketing cycle in which insurance is relatively available

and affordable.

Sovereign Immunity: The right reserved by a government to preclude legal action against itself by virtue of its sovereignty. It is based in part on the need for governments  to make some judgment in the public interest, which may deprive some citizens of

property or other rights.

Special Events Liability Insurance: Purchased to cover special events and activities. Many jurisdictions have arrangements in which groups pay part of the premium when they lease or use public facilities. Coverage may be purchased by the sponsor of an event, as well as by the public entity.

Stop Loss: An insurance policy provision designed to cut off losses at a given point.

The stop loss provision can be on a per occurrence and/or aggregate basis.

Strict Liability: Usually used with product liability coverage. Provides that the manufacturer or distributor of a defective product is liable for injury or damage

caused by the product, regardless of fault or negligence by the claimant., Claimant

must prove that a product is defective. (See Absolute Liability.)

Structured Settlements: The purchase of an annuity that provides plaintiff with a stream of payments instead of a lump sum.

Subrogation: The rights of an insurer to take action against a third party to recover an

amount paid on a loss when the third party is at fault.

Subrogation Clause: A condition in insurance policies that allows insurers to try to recover losses from a third party who was liable for an insured’s loss. It also

prevents insureds from collecting from a third-party after they have already collected from an insurance company.

Superfund: See Comprehensive Environmental Response, Compensation and

Liability Act.

Surety Bond: An agreement that provides for monetary compensation if a party fails to perform specified acts within a stated period. For example, a surety company becomes responsible for fulfilling a contract if the contractor defaults.

Surplus Insurance: Insurance covering loss exposures for which insurance is not

available in a particular state. Coverage is provided in accordance with state surplus line

provisions by companies that are not licensed to sell the particular line of insurance in the state.

Syndicate: A group of insurance companies joining together to insure a certain property

that is of extremely high value, high hazard or very expensive to underwrite.

T

Terminate-for-Cause: An employment system in which organizations must have a  justifiable reason for firing an employee (See Employment-at-Will.)

Third-Party: In an insurance relationship, someone other than the insured or the  insurance company.

Title VII of the 194 Civil Right Act: A federal law prohibiting discrimination in employment on the basis of sex, age, race, nationality or religion.

Title 42 of the U.S. Code Section 1983: Provides that every person who deprives or causes a citizen to be deprived of a constitutional right will be held liable in a suit or

other legal proceeding seeking redress.

Title 42 of the U.S. Code Section 1988: Amends Section 1983, the Civil Rights Act, by

allowing a prevailing party in a civil rights suit to recover attorney’s fees in addition to any

damages.

Tort: A Private or civil wrong or injury independent or contract. A valid tort claim must

meet four conditions. There must be a duty owed to the plaintiff by the defendant; there

must have been a breach of this duty by the defendant; the plaintiff must have suffered damages, and these damages must be the result of the breach of duty.

U

Umbrella Insurance: A type of excess insurance that covers several primary policies

as well as some areas not covered by primary insurance.

Underwriter: A person employed by an insurance company who is responsible for

selecting and rating risks to insure. This term may also be used as a synonym for “insurer.”

Unemployment Insurance : Coverage compensating for loss of income to workers

because of unemployment. It is funded by payroll taxes subject to federal and state regulations.

V

Valuations: An estimate of the value of an item, usually by appraisal.

Vicarious Liability: Responsibility of a person or an organization for the acts of another. For example, in some circumstances, employers would be responsible for the actions of their employees. In these cases, employers are vicariously liable. (See Contingent  Liability.)

W

Waiver: Surrendering a right or privilege known to exist. Watch List: An A.M. Best Co. insurance rating indicating an insurance company experienced a decline in profitability, leverage or liquidity, but the decline was not substantial enough to reduce the rating. Watch lists are also maintained by state regulators and the National Association o f

Insurance Commissioners.

Willful and Wanton Acts: Also called intentional injuries, acts intended to inflict damage or harm. Many public entities may not want their insurance policy to cover willful and wanton acts for employees or officials, but the policy should cover defense for the allegations of these acts.

Workers’ Compensation Insurance: Benefits required by state law payable to employees to cover costs resulting from injuries., disability, or death because of

occupational hazards. Workers’ compensation benefits are paid regardless of fault.