APPLICATION (APP) – Form on which the potential insured provides the facts requested by the insurance company and on the basis of which (with information from other sources) the insurance company decides to accept the risk, change the coverage offered or reject the risk. NEGLIGENCE – Failing to see the level of diligence exercised that an ordinary person would use with reasonable caution in the circumstances. Negligence can be caused either by omission or commission, or by both. Contract headquarters – the jurisdiction in which the contract is issued or delivered, as specified in the contract. Viatic Settlements – Contracts or agreements in which a buyer agrees to purchase a life insurance policy in whole or in part. Captive insurer – an insurance company established by a parent company to insure the exposures of the parent company. REINSURANCE – (1) A liability contract where the insurance company deducts other insurance to insure it against loss or liability due to the original insurance. (2) Insurance of a risk assumed by the insurance company by an insurance company in whole or in part with another insurance company that undertakes to reimburse the insurance company for the reinsured portion of the claim. The insurance company that receives the reinsurance is referred to as a “ceding insurance company”; the insurance company that is in the process of reinsurance is called a “reinsurer”. A reinsurer, in turn, can claim reinsurance for part of the risk they reinsure, a process known as “retrocession.” Option – an agreement that gives the buyer the right to buy or receive, sell or deliver, enter into, extend or terminate or execute a cash settlement based on the actual or expected price, level, performance or value of one or more underlying interests. Private Passenger Car (PPA) – Quotes that include individual or combined coverage, such as the following: Motor Vehicle Liability, Personal Injury Protection (PIP), Medical Payments (MP), Uninsured/Underinsured (UM/UIM); Specified causes of loss, ensemble, and collision. FIRE – combustion that is enough to create a spark, flame or glow, and is hostile (as opposed to friendly – that is, not where it is supposed to be, as in an oven).
Foreign insurer – an insurance company that sells policies in a state other than the state in which they are registered or resident. FLOATING POLICY – A policy that is protected by movable property and covers it wherever it is. LIMITATIONS OF LIABILITY – The amount or amounts beyond which liability insurance does not protect the insured from a particular policy. Exclusions serve a variety of purposes. Most apply to risks that fall into one of the following categories. Start date – the date on which the organisation was first required by issuing policies and/or entering into a reinsurance contract for an insurance risk. .