The Institutes Glossary


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The formation of ice at a structure’s roof edge, which can prevent the flow of the melting snow load from being shed as intended.
A crime in which an imposter uses the name or personal identification information of a person (the victim), without his or her knowledge, to set up and/or use bank accounts, credit facilities, government and other benefits, or the victim’s reputation, often leading to adverse consequences for the victim.
A medical condition arising from an obscure or unknown cause or a medical condition that is peculiar to an individual.
Item, substance, process, or event capable of causing a fire or explosion, such as open flames, sparks, or static electricity.
The minimum temperature to which a substance must be heated for it to start self-sustained combustion without a separate ignition source.
A presentation or depiction that includes nonguaranteed elements of a life insurance policy over a period of years.
A gesture that accompanies spoken words, used for emphasis.
An annuity contract bought with a single payment and with a specified payout plan that starts right away.
A defense that, in certain instances, shields organizations or persons from liability.
A law that allows insurers and law enforcement officials to share information about fraudulent activity without facing potential civil lawsuits for defamation, harassment, malicious prosecution, bad faith, or breach of privacy.
A positive or negative consequence or change in value or level of a resource.
In accounting, the reduction in the cost basis of a financial asset by an amount that is deemed to be unrecoverable.
Any deleterious alteration in health status assessed by medical means, such as injury, illness, or loss or deficit of function. The AMA definition is “a deviation from normal in a body part or organ system and its functioning.”
The process of calling something into question. In terms of testimony, it calls into question the reliability of the testimony.
Characterization of a market that has sellers who can charge more for their products and services than the costs to produce those products and services, including a competitive return—that is, sellers have market power.
Holding oneself out as a licensed agent when one is not, a violation of insurance statutes.
Basic requirements that customers often take for granted.
The authority implicitly conferred on an agent by custom, usage, or a principal's conduct indicating intention to confer such authority.
A contract whose terms and intentions are indicated by the actions of the parties to the contract and the surrounding circumstances.
The permission to enter onto another’s land arising out of a relationship between the party who enters the land and the owner.
A clear, unequivocal, and decisive act by a party showing intent to waive that party's rights.
A warranty that is understood to apply even though it does not appear in the policy.
An obligation that the courts impose on a seller to warrant certain facts about a product even though not expressly stated by the seller.
An implied warranty that a product is fit for a particular purpose; applies if the seller knows about the buyer's purpose for the product.
Implied warranty that the venture in which the vessel is engaged is legal.
An implied warranty that a product is fit for the ordinary purpose for which it is used.
Implied warranty, applicable in voyage policies only, that the vessel will not deviate from its proper course except for permitted reasons.
An implied warranty requiring that the vessel be seaworthy: the captain and crew are competent, the stores are adequate, and the vessel is in condition to make the voyage.
An implied promise in a contract for the sale of goods that the seller has legal ownership of goods and has no knowledge of any security interest or other lien on the goods other than those disclosed to the buyer.
A contract that is not express but that the parties presumably intended, either by tacit understanding or by the assumption that it existed.
An obligation that is not an actual contract but that is imposed by law because of the parties’ conduct or some special relationship between them or because one of them would otherwise be unjustly enriched.
A tax imposed by a government on goods brought into the country.
Land with man-made alterations.
Alterations or additions made to the building at the expense of an insured who does not own the building and who cannot legally remove them.
At common law, the plaintiff’s imputed responsibility for the defendant’s negligence.
A concept holding one party responsible for another’s negligence by virtue of the relationship between the two parties.
A phrase that means "in the place of a parent" (as when another person fills the parent's role, such as a legal guardian).
A vessel capable of movement, even if it is at anchor or under repair.
An illegal transaction in which both parties are equally at fault.
A legal action against a person in admiralty proceedings for any claims.
Clause that is ordinarily added to tug policies to cover liability resulting from the actions of the tug captain while giving orders on board the vessel that the tug is assisting.
A legal action against a vessel in admiralty proceedings, that effectively puts a lien on the vessel for any claims (an action against a thing).
An endorsement to a maritime operations liability insurance policy that extends the policy to cover liability claims when the defendant named in a lawsuit is a vessel belonging to the insured, rather than the named insured.
A claim based on the lack of reasonable security for the circumstances. This might include items such as poor lighting, a lack of security personnel, or faulty locks.
An intentionally set fire.
A payroll plan that increases an employee's hourly pay rate after the employee has completed an established quota of work units.
The date (month and year) when the record representing the transaction (policy issuance, endorsement, cancellation, audit, paid loss, or outstanding loss) is generated or coded.
A clause that adds coverage to an ocean marine cargo policy for loss resulting from bursting of boilers, breakage of shafts, latent defects in the vessel, or faults or errors in the navigation or management of the vessel.
A third-party beneficiary who has no contractual rights but benefits from a contract even though that is not the intent of the parties to the contract.
The use of a residential premises for other than residential purposes, such as a home office or studio.
Any labor operation completed in its entirety while another, concurrent operation is performed.
A method for valuing an intermediary that is based on the level of income the intermediary would generate for an investor.
The profit before tax allocation.
Income that arises when a deceased person was entitled to items that would have been gross income for federal income tax purposes, but which were not includable in the decedent’s gross income for the year of his or her death.
A method used to estimate needed retirement income based on a percentage of expected final average earned income.
The financial statement that reports an organization's profit or loss for a specific period by comparing the revenues generated with the expenses incurred to produce those revenues.
The development and implementation of strategies designed to reduce, change the timing of, or shift income tax liabilities.
The amount that the insured pays to have goods shipped to the insured’s premises from a supplier.
A person who has impaired judgment and cannot legally enter into business contracts.
A clause that states that the insurer cannot contest the policy after it has been in force for a specified period, such as two years, during the insured’s lifetime.
One who signs the formal incorporation application that is filed in the appropriate state office.
A nonmaterial interest in real property.
A policy provision that limits or suspends coverage during the period in which a specified hazard has increased.
National Flood Insurance coverage that pays for compliance costs related to floodplain management for qualifying structures.
A factor applied to the rates for basic limits to arrive at an appropriate rate for higher limits.
A table used by insurers to price layers of coverage in excess of the insurer’s base limit.
A bond that covers a specified piece of a larger area of land with an issued mining permit.
Losses that have occurred but have not been paid by the insurer.
Losses that have occurred but have not yet been reported to the insurer.
A reserve established for losses that reasonably can be assumed to have been incurred but not yet reported.
Liabilities that reflect both the reserve amount of reported losses and the incurred but not reported losses that the organization anticipates financing through retention.
The calculation of loss costs by adding the amounts paid for losses to reserves for pending claims, to the additions to those reserves and to the estimated amount of incurred but not reported losses.
A retrospective rating plan in which the insured pays a deposit premium during the policy period; after the end of the policy period, the insurer adjusts the premium based on the insured’s actual incurred losses.
The sum of paid losses, paid loss adjustment expenses, loss reserves, and loss adjustment expense reserves.
The losses that have occurred during a specific period, no matter when claims resulting from the losses are paid.
The surety's common law right to compensation from the principal after paying a claim.
In the context of corporate law, a corporation’s right or duty to reimburse a director, an officer, or another employee for some or all of the expenses incurred in defending a lawsuit instituted or threatened against the person in his or her official capacity.
The process of restoring an individual or organization to a pre-loss financial condition.
A bond that guarantees that the principal and the surety, jointly and severally, agree to indemnify or pay the obligee damages.
A contract provision that attempts to shift the risk and liability for one's own negligent acts to another.
To restore a party who has sustained a loss to the same financial position that party held before the loss occurred.
Party in a hold-harmless agreement whose legal liability is assumed by the indemnitor.
Party in a hold-harmless agreement who assumes the other party's liability.
In a surety agreement, the right of a surety to seek reimbursement from the principal for the resources the surety expended when it performed the principal’s duty.
Restoring the insured to the same financial position held immediately before a loss.
An indemnity against liability agreement gives one party a right to compensation from the other party for claims specified by the contract.
A contract under which one party (the indemnitor) agrees to reimburse a second party (the indemnitee) for losses that the indemnitee has already paid.
An ancillary agreement among co-reinsurers to a reinsurance treaty, that provides that they will pay their proportionate share of the liabilities assumed under a cut-through endorsement or guarantee endorsement to the issuing reinsurer.
A type of healthcare plan that allows patients to choose their own healthcare provider and reimburses the patient or provider at a certain percentage (usually after a deductible is paid) for services provided.
A legal document that details the terms of a bond.
An item’s relative complexity within an assembly, system, or function.
A situation in which the occurrence of one event has no effect on the likelihood of the occurrence of any other event.
An independent claims representative who handles claims for insurers for a fee.
A business, operated for the benefit of its owner (or owners) that sells insurance, usually as a representative of several unrelated insurers.
An insurance marketing system under which producers (agents or brokers), who are independent contractors, sell insurance, usually as representatives of several unrelated insurers.
A group of agencies that contractually link to share services, resources, and insurers to gain advantages normally available only to large regional and national brokers.
An insurance marketing system under which producers (agents or brokers), who are independent contractors, sell insurance, usually as representatives of several unrelated insurers.
A producer who works for an independent agency who can be either the owner or an employee of the agency.
A statement that demonstrates the auditor's or accountant's scope of service. Alternatively referred to as the cover letter or transmittal letter.
A person (or organization) hired to perform services without being subject to the hirer’s direction and control regarding work details.

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