Absolute Liability - Liability that arises from an extremely dangerous situation. Absolute liability is often found in cases involving explosives. Also known as "strict" liability. For example, you are absolutely liable if you keep a wild animal as a pet. Accident - A sudden and unexpected event occurring at a specific time and place. Actual Cash Value (ACV) - The cost to replace a property item at the time of loss, less an allowance for depreciation. Often used to determine amount of reimbursement for a loss (replacement cost minus depreciation). Additional Insured - A person, firm, or corporation other than the named insured on a policy, or a lender named in a mortgage clause, who is protected against loss by the terms of the policy. Additional Living Expenses - A coverage designed to reimburse the insured for an increase in living expenses necessitated by loss to the dwelling. This indirect loss must be the result of direct loss by a covered peril. Adjuster - Represents the insurance company and acts for the company in working on agreements as to the amount of a loss and the liability of the company. Admitted Company - A company that meets the state insurance department's standards and is authorized by the director to do business in the state. Agent - An individual appointed by an insurance company to solicit, negotiate, effect, or countersign insurance contracts on its behalf. Aggregate Limit - A type of policy limit found in Liability policies that limits coverage to a specified total amount for all losses occurring within the policy period. Alien Company - An insurance company incorporated in a country other than the United States. Allied Lines - Property coverages that are closely associated with and frequently sold with fire insurance - Dwelling Building and Contents form, earthquake insurance, sprinkler leakage, etc. All Risk Insurance - Insurance protecting the insured from loss arising from any peril other than those specifically excluded by name. This contrasts with named peril insurance, which names the peril or perils insured against. Application - A questionnaire that is filled out by an agent and the prospect seeking insurance. Teh form contains rating and underwriting information. The applicant is expected to make representations by answerings questions to the best of the applicant's knowledge (truthfully). Appraisal - If the insured and insurer cannot agree on the amount of loss, either may demand an appraisal. If demanded, each will select an appraiser who, jointly, will select an umpire. Agreement by any two of the three will be binding. Each party will pay its own appraiser and share equally the expense of the appraisal and the umpire. Appurtenant Structure - A structure belonging to the insured structure, such as a toolshed. Appurtenant structures are provided for in the homeowner's policy and Other Dwelling policies. This coverage is often called Other Structures or Out Buildings. Assigned Risk - There are some applicants that underwriters do not care to insure, but because of state law or otherwise, must be provided protection. To become authorized, a casualty company must agree to participate in the Assigned Risk Pool and take its turn providing auto insurance high-risk drivers. Also known as the "Auto Insurance Plan". Audit - A survey of the financial records of the insured collected to determine exposures, limits, etc., which are needed to calculate the premium. The initial premium is only a deposit. Bailee - One who has temporary custody of property belonging to another. An example is a dry cleaner. Bailee's Customer's Policy - Insurance obtained by a bailee, to cover loss or damage to a customer's property in the bailee's custody, without regard to liability. Binders - Binders and other temporary insurance contracts may be made orally or in writing. Each binder is deemed to include all usual terms of the policy for which it was given, plus endorsements. Life or disability insurance utilizes conditional receipts instead of binders. Blanket Position Bond - Fidelity bond that specifies a single limit of liability applicable to each employee involved in a loss. Bodily Injury - usually defined to include bodily harm, sickness, disease, including required care, loss of services, and resulting death. Boiler and Machinery Policy - Insurance that covers the insured against loss (Liability and Physical Damage) arising out of the use of steam boilers or other machinery. May be written as a separate policy or as part of a Commercial Package Policy. Bond - An obligation of the insurance company to protect one against financial loss caused by the acts of others. Broker - One who represents an insured in the solicitation, negotiation, or procurement of contracts of insurance, and who may render services incidental to those functions. By law, the broker may also be licensed as an agent. Burglary - As it is defined in crime insurance policies, the unlawful taking of property by forced entry into, or exit from the premises, while the premises are closed for business. There must be visible evidence of forced entry or exit. Businessowner's Policy (BOP) - A commercial package policy designed for certain types of small businesses, combining Property and Liability coverages. Very similar to a Commercial Package Policy (CPP). Cancellation - Termination of insurance contract in force by voluntary act of the insurance company or insured, affected in accordance with provisions in the contract or by mutual agreement. Casualty Insurance - A type of insurance that is primarily concerned with losses caused by injury to persons and legal liability imposed upon the insured for such injury or damage to property of others. Co-insurance - 1. In property insurance, a clause under which the insured shares in losses to the extent that teh insured is under-insured at the time of the loss. 2. In health insurance, a provision that the insured and insurance company will share covered losses in agreed proportion. In health insurance, the preferred term is percentage participation. Commercial Package Policy - A multi-peril, multi-line policy that provides a broad spectrum of Property and Casualty coverages for businesses. In addition to required basic property and liability insurance, the insured may add additional Marine, Boiler and Machinery, Glass, Crime, Business Auto, or Farm coverages. Comparative Negligence - Doctrine that a defendant is liable only for the amount of damages allocated to that defendant in direct proportion to the defendant's percentage of fault (if not 51% or more at fault, defendent is not held liable). Competitive State Fund - A state fund writing Workers' Compensation insurance in competition with private insurers. Comprehensive Personal Liability - Non-business liability exposure of individuals who are insured under this policy. Teh most common personal liabilty exposures arise out of the resident premises and activities of individuals and family members. Comprehensive personal liability coverage first became available as a separate policy. Eventually it was incorporated into Homeowners policies. Compulsory Insurance - Any form of insurance that is required by law. In many states, for example, automobile bodily injury liability insurance is compulsory for all automobile owners. Concealment - The withholding of a material fact from the insurance company. May void the policy. Conditions - The portion of an insurance contract that sets forth the rights and duties of the insured and the insurance company. Consequential Loss - Indirect losses that occur as a "consequence" of a direct loss. Includes Time Element coverages, such as coverage for rental value. Consideration - A characteristic of a legal contract - the thing of value exchanged for the performance promised in the contract. In insurance, the applicant's answers and the policy premium paid constitute the consideration. Contigent Business Income - A Time Element coverage that protects the insured against indirect loss that results because of a direct loss to a supplier, buyer, or leader location. Contingent Liability - Liability that an insured person or business incurs because of the actions of others (family or employees). Also called Vicarious Liability. Contract - A legal agreement between two parties promising a certain performance in exchange for a certain consideration. Contractual Liability - Provides coverage against liability arising out of an insured's contractual obligations. Countersignature - The signature of a licensed agent, which, in most states, must appear on the policy to validate the contract. Custodian - In crime insurance, a custodian is the insured or a regular employee or partner of the insured who has care or control of property within the premises. Does not include watchmen, porter, or janitor. Debris Removal - A coverage provided in many property contracts that reimburses the insured for expenses involved in removing debris produced by a loss from a peril insured against. Declarations Page (Dec Sheet) - A portion of the insurance contract that contains information such as the name and address of the insured, the property insured, its location and description, the policy period, the amount of insurance coverage, applicable premiums, and supplemental representations by the insured. Deductible - Usually, a dollar amount the insured must pay on each loss to which the deductible applies. The insurance company pays the remainder of each covered loss up to the policy limits. Depreciation - Decrease in the value of property over a period of time due to use, wear and tear, and obsolescence. Direct Loss - Loss that is a direct result of a peril, such as a fire. Direct Writer - An insurance company that sells its policies through licensed agents who represent the insurer exclusively, rather than through independant local agents, who represent several insurance companies. Dividend - The return of part of the premium paid for a participating policy. Domestic Insurance Company - An insurance company formed under the laws of the state in which the insurance is written. Earned Premium - That portion of the premium for which policy protection has already been given during the now expired portion of the policy term. Effective Date - The date on which an insurance policy or bond goes into effect and from which protection is furnished. Employers Liability Coverage - Coverage provided under a Workers' Compensation policy to cover the employers liability arising employees' work-related injuries. Employers Non-Ownership Liability - Provides coverage to an employer for liability arising out of an employee's use of his own auto in the employer's business. May be included under a Business Auto Policy of added to a Commercial General Liability. Endorsement - A document, agreed to by both parties, that is attached to the policy and which modifies or changes the original policy in some way. Errors and Omissions - A Professional Liability coverage that protects the insured against liability for committing an error or omission in performance of professional duties. Exclusions - Causes, conditions, or property listed in the policy that are not covered and for which no benefits are payable. Expediting Expenses - A Boiler and Machinery coverage that covers the cost of temporary repairs and the costs of speeding up permanent repairs. Examples: Overtime, express transportation charges. Experience - The loss record of an insured, a class of coverage, or an insurance company. Extended Coverage Endorsement (ECE) - A specific endorsement, attached to a standard Fire policy, usually providing coverage for wind storm, hail, explosion, riot, civil commotion, aircraft, vehicular damage, volcanic eruption, and smoke damage. Extra Expense Insurance - A Time Element coverage for additional expenses incurred by the insured's business to continue operations following a direct loss by a peril insured against. FAIR Plan - Fair Access to Insurance Requirements. A program established by law that makes property insurance available and affordable to insureds who might otherwise be uninsurable because of environmental hazards. Federal Crime Insurance - A federally administered program that makes crime insurance available and affordable to those who might otherwise have found coverage difficult to obtain. Fidelity Bond - A class of bonds that guarantees an employee's honest discharge of duty. Fiduciary - A person who occupies a position of special trust and confidence. For example, one handling or supervising the affairs or funds of another. Financial Responsibility Laws - State laws that require owners or operators of autos to provide evidence that they have the funds to pay for automobile losses for which they might become liable. Insurance is the usual method for providing this evidence to the state. Fire - Combustion, sufficient to produce a spark, flame, or glow, that is hostile (not in a place where it is intended to be). A friendly fire is one in your fireplace. Fire Insurance - 1. Contract that indemnifies an insured for loss caused by the destruction of the insured property resulting from fire. 2. The field of insurance that provides policies on the insured property for a variety of perils, including fire. Floater Policy - Protection that follows moveable property, covering it wherever it may be, rather than applying only at a fixed location, such as a Personal Articles Floater (PAF). Flood Insurance - Insurance designed to reimburse property owners for loss due to flood or to flood-related erosion. Administered through the Federal Insurance Administration, but marketed through independant agents. Fraud - A false statement intended to deceive the insurer and induce it to part with something of value or to surrender a legal right. May void a policy. Garage Policy - A policy that provides coverage for garage businesses (dealers, service stations, garages, parking lots, etc.) Includes coverage for liability, physical damage, and garage keepers' losses arising out of owned, non-owned, and hired autos. Garage Keepers Liability - A coverage that is part of the Garage policy. Covers a garage risk's legal liability for customers' autos in the care, custody, or control of the garage. At the insured's option, can also apply without regard to fault, for an additional premium. General Agent (GA) - An individual appointed by an insurer to administer its business in a given territory. A GA is responsible for building the agency and service force. Compensation is on a commission basis, although there may be additional expense allowances. Hazard - Anything that increases the seriousness of a loss or increases the likelihood that a loss will occur (risk) due to a peril. For example, improperly stored combustible materials, worn tires, intentional abuse to insured property, unsafe structural changes. Hold Harmless Agreement - A contractual arrangement whereby one party assumes the liability inherent in a situation, thereby relieving the other party of responsibility. Such agreements are typically found in contracts such as leases, side track agreements, and easements. For example, a typical lease may provide that the lessee must (hold harmless) the lessor for any liability from accidents arising out of the premises. Hull Insurance - In Ocean Marine and Aviation insurance, insurance against physical damage to a plane or ship. Imports and Exports - A category of the inland and Ocean Marine Nationwide Definition, which is made up of risks eligible for Marine insurance. Improvements and Betterments - Additions or changes made by an insured to a building that may or may not be owned by the insured. Cost arising from these changes may enhance values and thereby require special insurance consideration. Indemnity - Insurance is designed to restore teh policyholder to the same financial condition enjoyed prior to a loss. The intent is to cover the amount of the actual loss only and to avoid paying amounts that allow someone to profit from a loss situation. Indirect Loss - Loss that is a result or consequence of a direct loss. Inherent Vice - A condition or defect that exists within property from the beginning. A tendency of the property itself. An example of inherent vice is the tendency of milk to sour. Insurance policies usually exclude inherent vice. Inland Marine Insurance - A form of insurance originally designed as an extension of Marine coverage to insure transportation of goods over land. Today, in addition to goods in transit, it covers a variety of portable property. Instrumentalities of Transportation and Communication - A category of the Nationwide Definition that includes several different classes of Inland Marine, including bridges, tunnels, pipelines, etc. Insurability - Acceptability of an applicant for insurance to the insurance company. Insurance - A social device that protects people against certain types of financial losses by transferring pure risk from individuals to a group. Insurance involves the pooling of a large number of individual risks. Funds to cover individual losses are raised by collecting small amounts of money (premiums) from a broad base of buyers. Insurance Commissioner - Common title for head of state department of insurance (called "director" in some states). Insurance Policy - A contract, a legal document, which establishes the terms of agreement between the insurer and the insured. Insured - The party to an insurance arrangement to whom, or on behalf of whom, the insurance company agrees to indemnify for losses, provide benefits, or render service. Insurer - The insurance company assuming risk and agreeing to pay claims or provide services. Insuring Agreement - The section of an insurance policy that states which losses will be indemnified, what property is covered, and which perils are insured against. ISO (Insurance Services Office) - An organization, comprised member companies, that analyzes statistics collected from members and then establishes and files standard rates for many lines of insurance. Also develops and files standardized policy forms on behalf of members. Jettison - A voluntary action to rid the ship of cargo in order to prevent further damage or peril. Law of Large Numbers - An insurance company bases its rates on a homogeneous group. Risks are not usually considered insurable unless the insurer has a large enough base of previous loss experience to be able to accurately project future losses. It is the Law of Large Numbers that makes accurate predictions of similar risks possible. Liability - Broadly, any legally enforceable obligation. The term is most commonly used in a pecuniary (money-related) sense. Liability Insurance - Insures the individual for financial losses that may arise out of the person's responsibilities to others imposed by law or contract. Limits of Liability - The maximum amount of money the insurance company will pay for a particular loss, or for loss during a period of time. Lloyd's Association - A voluntary association of individuals, or groups of individuals who agree to share in insurance contracts. Each individual or "syndicate" is individually responsible for the amounts of insurance it writes. Also known as Surplus Lines. Loss - An unpredictable reduction in the quality, quantity, or value of something. For example, bodily injury, disease, property damage, physical disappearance of property, incurred expenses, death, etc. Loss Ratio - The amount of claims paid out compared to the amount of premiums received over the same period of time. Example: Company receives premiums of $1,000,000 and pays out $400,000 in claims over the same period of time. The loss ratio would be 40%. For every dollar that came into the company in premium, 40 cents went back out in claims paid. Malpractice Insurance - A form of Professional Liability insurance used to insure professionals, including physicians, dentists, and druggists, against their liability for professional misconduct or lack of ordinary skill. Marine Insurance - A form of insurance primarily designed to cover property in transport over land or sea. Material Fact - A fact that, had the company known it, would have caused it to decline the risk or include entirely different provisions than those currently included. Mercantile Open Stock Burglary Policy - Crime policy that covers the insured's merchandise, furniture, fixtures, and equipment against burglary. Messenger - In crime insurance, any regular employee of the insured, who has care or control of the property outside the premises. Also includes the insured, a partner, or an officer. Misrepresentation - The use of written or oral statements of the insured or insurance company misrepresenting the risk, terms, coverages, benefits, privileges, or estimated future dividends of any policy. Monopolistic State Fund - A state insurance plan that prohibits compensation by private carriers, e.g., Workers' Compensation fund in some states. Moral Hazard - The hazard that is created by a dishonest individual who would be willing to create a loss situation on purpose just to collect from the insurance company. Morale Hazard - Hazard created by an individual's tendency to contribute to a loss through the individual's own irresponsible actions or carelessness. Mortgagee Rights - Rights granted toa mortgagee (lender), uner a property contract issued to a mortgagor, by virtue of the mortgagee's financial interest in the property. Multi-Peril Policy - Technically, an insurance policy that insures against more than one peril. More commonly, an insurance policy that provides coverage against both property and casualty perils. Mutual Insurance Company (Insurer) - An incorporated insurance company, without capital stock, whose governing body is elected by the policy holders. The policy holders own the company and they might share in the success of the company through dividends. Mysterious Disappearance - Vanishing of property with no known explanation. Named Insured - Any person, firm, or corporation, or any member thereof, specifically designated by name as insured(s) in a policy, as distinguished from the others who, though unnamed, are protected under some circumstances. Named Peril Policies - Policies that insure against only the perils named, contrary to All Risk policies. Sometimes called Specified Peril policies. Name Schedule Bond - Fidelity bond that covers each employee named in the policy scheduled for the amount listed in the schedule. National Flood Insurance Program - The federal government's program to provide flood insurance at subsidized rates. Nationwide Definition - A document designed to categorize and classify risks eligible for Ocean or Inland Marine insurance. Negligence - Failure to use that degree of prudence that an ordinary person of reasonable prudence would use under the same given circumstances. Negligence may be constituted either by acts of omission or commission, or both. No-Fault Insurance - A form of automobile insurance mandated by law in many states, whereby an insurance company reimburses its insured for auto losses, regardless of fault, and without resort to subrogation. Non-Owners Automobile Liability Insurance - Protection for the policyholder against claims and bodily injury and property damage liability caused by the insured's employees or others using autos not owned or hired by the insured while conducting business. A Named Non-Owner policy protects an individual who drives only borrowed or rented cars. Non-Resident Agent - An agent licensed in a state in which the agent is not a resident. Obligee - In bonds, the party to whom the principal makes the promise, and for whose protection the bond is being writen. Occupancy - Type and character of the use of property in question. Occupational Disease - Impairment of health caused by continued exposure to conditions inherent in a person's occupation or a disease caused by or resulting from the nature of an employment. Ocean Marine Insurance - Marine insurance designed to provide broad coverage for cargo and ships in transit over sea. Includes Cargo insurance, Hull insurance, and Liability coverage (Protection and Indemnity). Other Insurance - The existence of another contract covering the same interest and perils. Sometimes called Pro Rata Liability, because the insurers pay claims according to the protection of premiums paid to each. (Remember, you can't collect in total more than you lost.) Owners and Contractors Protective Liability - Part of a Commercial General Liability policy that protects an owner or general contractor against liability arising out of the acts of contractors or subcontractors. May be issued to the contractor or subcontractor for the protection of the owner or general contractor, or may be issues directly to the owner or general contractor. Pair and Set Clause - A clause found in various property insurance contracts that states when part of a set is damaged or destroyed, the insured is not entitled to reimbursement for the entire set. Policies provide various methods for determining the amount of reimbursement. Fine Arts floaters do not contain this clause. Partial Loss - A loss that does not either, 1. completely destroy or render worthless the insured property, or 2. exhaust the insurance applying thereto. Performance Bond - A Surety Bond that guarantees a job will be completed by the contractor according to contract specifications. Peril - Cause of potential loss. An insurance policy may name the perils insured against, or it may be an All Risk form - one that insures all perils not specifically excluded in the policy. Personal Articles Floater - Personal Inland Marine insurance that provides All Risk coverage on nine optional classes of personal property - jewelry, furs, cameras, musical instruments, silverware, golf equipment, fine arts, stamp collections, and coin collections. Personal Auto Policy - Easy-to-read auto policy that provides broad coverage for both owned and non-owned autos that are used, maintained, and/or operated by the insured and the family. Personal Injury Coverage - Liability coverage for third-party claims for damages other than physical, such as libel, slander, false arrest, wrongful eviction, invasion of privacy, etc. Personal Lines - Insurance coverages intended to protect individuals and their families. Personal Property Floater - Personal Inland Marine floater that provides All Risk coverage on unscheduled personal property. Personal Yacht Insurance - A for of Ocean Marine insurance available to individuals who own large boats. Provides both Hull and Protectiona nd Indemnity insurance. Physical Damage - In auto insurance, damage or loss to the insured's own autos or autos in the insured's care, custody, or control. Physical Hazard - The material, structural, or operational features of the risk itself, part from the morale or moral hazards of persons owning or managing it. Policy - The written contract or certificate effecting insurance, including papers attached to and made a part of it. Position Schedule Bond - Fidelity bond that lists covered job categories, each with a separate amount of Insurance, rather than the individuals holding those positions. New employees hired in a scheduled position are automatically covered. Premium - 1. Consideration for the insurance. 2. Periodic payment to keep a policy in force. Principal - In bonds, the party who promises to do (or not to do) a specific thing. Private Passenger Autos - Ordinary cars, station wagons, jeeps, utility autos (pickups, panel trucks, and delivery vans not used commercially), and utility trailers designed to be pulled by a private passenger auto. Products and Completed Operations - A form of General Liabilty insurance that covers a company against liabilty arising out of its products (a manufacturer) or its completed operations (a contractor or architect). Professional Liability - Liability arising out of the rendering or failure to render servies of a professional nature. Proof of Loss - A formal statement by the insured to the insurance company regarding a loss. The purpose is to place before the company sufficient information concerning the loss to enable it to determine its liability. Property Damage - A type of loss covered under many liabilities for damage Includes the insured's liabilty for damage to property of others or loss of other's use of other's property. Property Insurance - Insurance indemnifies a person with an interest in property for its loss. Pro Rata Cancellation - The termination of a contract within its premium charge being adjusted in proportion to the exact time the protection has been force. All unearned premiums is returned to the insured. Pro Rata Liability Clause - Clause in a Fire policy that provides a method of sharing loss when more than each company covers no more than its share. Also known as the Other Insurance Clause. Protection and Indemnity - In Ocean Marine insurance, a form of Liability insurance. Pure Risk - A risk in which there is no chance of gain, only loss. Rate - The per-unit cost of insurnace. Rates and Premiums, Setting - The chance of loss for risk is a combination of the probable frequency of loss and the probable severity of loss, based on the accumulated data for similar risks. In the absence of reasonably accurate projections of potential losses, insurance companies would have no basis for setting rates and premiums. Rebating - Giving an offering or benefit other than those specified in the policy, to induce a customer to buy insurance. Reciprocal Company - An unincorporated group of subscribers that exchanges insurnace responsibilities with other members. Managed by an attorney-in-fact. Removal - Process of removing property for the purpose of preserving it from peril insured against. Property contracts provide coverage for loss of property during removal. (For example, during a fire, you remove your furniture from your dwelling, exposing it to other risks.) Renewal - The continuation in full force and effect of a policy that is about to expire. Rental Value - An indirect Property coverage available under the Dwelling and Homeowners policies, also available with certain Commercial contracts, which reimburses the insured for rents lost when rented property is damaged by a peril insured against. Replacement Cost (R/C) - The cost of replacing property without deduction for depreciation. Representations - Facts that the applicant represents as true and accurate to the best of the applicant's knowledge and belief. Retention Limit - In an Umbrella Liability policy, the amount the insured must pay for a loss not covered by an underlying policy, before the Umbrella will begin to cover losses. Risk - The uncertainty of loss that exists whenever more than one outcome is possible. (In the area of life insurance, death is certain, but the time of death is uncertain.) Robbery - In crime insurance, the forcible and felonious taking of property from a messenger or custodian by violence or threat of violence. Safe Burglary Policy - A crime insurance policy that is designed to cover burglary of property from a safe or the felonious removal of the entire safe from the premises. Salvage - Property taken over by an insurance company to reduce its loss. Teh company may dispose of salvage property as it wishes, but on request and proper reimbursement, may return it to the insured. Second Injury Fund - A fund established under Workers' Compensation laws in most states to help pay any increased compensation that may result when an employee with previous injury is injured again. Short Rate - A percentage penalty charged on insurance cancelled by the insured before the end of the policy period. Return premium is calculated on a short rate basis, meaning the insurance company keeps a portion of the unearned premium to cover expenses. Solicitor - A representative who helps an agent or broker solicit insurance and collect premiums. A solicitor may neither bind nor countersign policies. Speculative Risk - A risk that may result in a loss or gain. Gambling is a speculative risk. Insurance companies insure pure risk, not speculative risk. Stated Value Policy - Insurance contract written to insure item of property for a specific amount of insurance. used in insuring hard-to-value items, such as fine arts. Stock Insurance Company - An incorporated insurance company with capital divided into shares and owned by the shareholders. Profits are shared by the stockholders. Profits are shared by the stockholders. Policyholders are not entitled to share in company profits. Subrogation - The transfer to the insurance company of the insured's right to collect for damages. After paying a claim, the company stands in the place of the insured in suing the negligent party, thus preventing the insured from collecting twice. Supplementary Payments - Found in most Liability contracts. Supplementary payments provide "extra" coverage over and above the insured's limit of liability. Included are defense costs, first aid, bond premiums, accrued interest on judgements, etc. Surety - The party (often the insurance company) that agrees to be responsible for loss that may result if the principal does not keep a promise. Surety Bond - A bond that guarantees that someone will perform faithfully whatever the person agrees to do or that someone will make an agreed upon payment to another party. Note that in a surety bond, there are three parties - the principal, who has agreed to perform the obligation; the obligee, for whose benefit the bond is written, and the surety, the insurer that provides the bond in condieration for the premium paid. Theft - Any act of stealing. Theft includes larceny, burglary, and robbery. Time Element Coverage - Provides protection for indirect loss that occurs when, following a direct property loss, there is a time lapse before the property can be used again. Includes Business Income, Contingent Business Income, and Extra Expense. Trip Transit Policy - An Inland Marine transportation policy, similar to the Annual Transit policy, but designed to cover a specific shipment. Underinsured Motorist Coverage (UIM) - Coverage of an auto policy that stacks coverage for an insured onto inadequate coverage of an individual who negligently caused injury to that insured. Umbrella Liability Policy - Provides broad coverage for an insured's liability over and above liability covered by underlying contracts or retention limits. Underwriting - The process of evaluating a risk for the purpose of issuing insurance coverage on it. Uninsured Motorist Coverage (UM) - Automobile coverage designed to provide bodily injury protection for the insured should the insured be involved in an accident in which the driver at fault has no insurance to cover the loss. Unoccupancy - The absence of person, return expected. Property coverage on a building is sometimes restricted when there are long periods of vacancy, but not unoccupancy. Utmost Good Faith - A principle of insurance which states that the insurance company must be able to rely on the honesty and cooperation of the insured, and the insured must rely on the company to fulfill its obligations in good faith. Vacancy - The absence of person and personal property from a building, not expected to return. property coverage is often restricted when there are long periods of vacancy, especially for the perils of vandalism and glass breakage. Vandalism and Malicious Mischief (VMM) - Protects property against damage caused by vandals. May be added by endorsement to the DP-1 Basic Form; included coverage in many other Property forms. Vicarious Liability - Imposed in some states on a person even though the person is not a party to the particular occurrence, e.g., the owner of a motor vehicle might be vicariously responsible for injuries even though the owner is not driving the car at the time of the occurrence. Warranty - 1. A statement that is guaranteed to be true in all respects. Statements on insurance applications are, in absence of fraud, not warranties, but representations (statements true to the best of the applicant's knowledge). 2. A sworn statment by the insured attesting to the presence of certain safeguards, such as a sprinkler or burglar alarm system. Breach of this type of warranty may void coverage. Workers' Compensation Insurance - 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. Workers' Compensation coverage does not include separate coverage for Employers Liability in Ohio. XCU Exclusion - An exclusion often found in a Commercial General Liability policy that excludes liability for explosions, collapse, or underground hazards.