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F
Fair Market Value – The price that a willing buyer would pay a willing seller, neither being under any compulsion to sell or buy.
Fire – Combustion sufficient to produce a spark, flame, or glow and which is hostile (as opposed to friendly – i.e., not in the place where it is intended to be such as in a furnace.)
Fire Insurance – Coverage for loss of or damage to a building and/or contents due to fire.
Fire Resistive Construction – A building, which has exterior walls, floors, and roof constructed of masonry or other fire-resistive materials.
Floater Policy - A policy under the terms of which protection follows moveable property, covering it wherever it may be.
Flood Insurance - A form of insurance designed to reimburse property owners from loss due to the defined peril of flood. Usually sold in connection with a government Flood Insurance plan.
Forgery – In general, any false writing with intent to defraud.
Form – An insurance policy itself or riders and endorsements attached to it.
Fortuitous Event – An unforeseen accident.
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G
Grace Period – A period after the premium due date, during which an overdue premium may be paid without penalty. The policy remains in force throughout this period.
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H
Hazard – A specific situation that increases the probability of the occurrence of loss arising from a peril, or that may influence the extent of the loss. For example, accident, sickness, fire, flood, liability, burglary, and explosion are perils. Slippery floors, unsanitary conditions, shingled roofs, congested traffic, unguarded premises and un-inspected boilers are also hazards.
Homeowner Insurance - An elective combination of coverages for the risks of owning a home. Can include losses due to fire, burglary, vandalism, earthquake, and other perils.
Housekeeping – The general care, cleanliness and maintenance of an insured property.
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I
Improvements and Betterments - Additions or changes made by a lessee at his own cost to a building that he is occupying, which enhance its value. These become part of the realty and require special insurance consideration.
Indemnify - To restore the victim of a loss, in whole or in part, by payment, repair, or replacement.
Indirect Loss ( Or Damage) - Loss resulting from a peril, but not caused directly and immediately thereby, for example: Loss of property due to fire is a direct loss, while the loss of rental income as the result of the fire would be an indirect loss.
In-Force – Insurance on which the premiums are being paid or have been fully paid. In life insurance, usually refers to insurance by face amount. In health, usually refers to premium volume being paid to insurance company or insurance companies in aggregate.
Inland Marine Insurance - A branch of the insurance business which developed from the insuring of shipments which did not involve ocean voyages. Exposures eligible for this form of protection are described in the nation-wide definition of Marine Insurance. Such diverse properties as bridges tunnels, jewellery and furs can now be written under Inland Marine forms.
Inspection - Independent checking on facts about an applicant or claimant, usually by a commercial inspection agency.
Insurability – Acceptability of an applicant for insurance to the insurance company.
Insurance – A formal social device for reducing risk by transferring the risks of several individual entities to an insurer. The insurer agrees, for a consideration, to assume, to a specified extent, the losses suffered by the insured.
Insurance Policy - Legal document issued to the insured setting out the terms of the contract of insurance.
Insurance to Value - Insurance written in an amount approximating the value of the property insured.
Insured - The person (or persons) whose risk of financial loss from an insured peril is protected by the policy. Sometimes call the “policyholder”.
Insurer – The Insurance Company.
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J
Joint Tenancy - Ownership of property shared equally by two or more parties under which the survivor assumes complete ownership. This is different from a tenancy in common where the heirs of a deceased party to the tenancy inherit his or her share.
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L
Lapse – Termination of a policy because of failure to pay the premium.
Lessee – The person, to whom a leas is granted, commonly called the tenant.
Lessor – The person granting a lease, also known as the landlord.
Libel – A written statement about someone, which is personally injurious to that individual.
Limit of Liability – The maximum amount, which an insurance company agrees to pay in case of loss.
Limits – Maximum amount a policy will pay either overall or under a particular coverage.
Loss – Generally refers to:
1.The amount of reduction in the value of an insured’s property caused by an insured peril.
2. The amount sought through an insured’s claim, or
3. The amount paid on behalf of an insured under an insurance contract.
Loss of Use Insurance - Coverage to compensate an insured for the loss of use of property if it cannot be used because of a peril covered by the policy.
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M
Market Value - The price for which something would sell, especially the value of certain types of assets, such as stocks and bonds. It is based on what they would sell for under current market conditions. For example, common stock market value would be the price of the stock as of a specified date.
Material Misrepresentation - The policyholder/applicant makes a false statement of any material (important) fact on his/her application.
Moral Hazard – A condition of morals or habits that increase the probability of a loss from a peril.
Morale Hazard – An attitude that increases the probability of loss from a peril. The attitude of, “It’s insured; so why worry?” is an example of a morale hazard.
Mortgage Insurance Policy - In life and health insurance, a policy the benefits from which are intended to pay off the balance due on a mortgage or meet the payments on a mortgage as they fall due upon or after the death or disability of the insured.
Mortgagee - The creditor to whom a mortgage is given and who lends money on the security of the value of the property mortgaged. Mortgagor – the debtor who received money and in turn grants a mortgage on his property as security for a loan.
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N
Named Insured - The first person in whose name the insurance policy is issued.
Named Perils - Named perils are the specific dangers a policy insures you against such as fire, windstorm, and hail in a homeowner’s policy, for example. These perils are “named” or listed in the policy.
Negligence - Failure to use that degree of care, which an ordinary person of reasonable prudence would use under the given circumstances. Negligence may be constituted by acts of either omission or commission or both.
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