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Standard & Poor

Organization that rates the financial stability of insurance companies doing business in the United States.

Standard exception classifications

Some duties/activities are considered so common to most business and/or such duties may be so far outside the operational activities of the business that employees engaged in these activities are considered exceptions to the governing classification rules. Payroll for these “standard exception” classes of employees is subtracted from the governing classification and assigned to the applicable standard exception code and rated separately from the governing class.

Status

To be considered a longshoreman or harbor worker requires that the employment involve the loading and unloading of ships; or the maintenance, repair or dismantling of ships.

Statute of limitations

Law that provides that certain types of suits must be brought within a specified time of the occurrence to be valid under the law.

Stock company

An insurance company owned by its stockholders; profits are shared by the stockholders; policyholders are not entitled to share in company profits.

Strategic risks

Uncertainty about the entity’s ability to compete and stay viable in the market place.

Strict liability

Also known as “absolute liability” it is imposed on the party who causes harm, regardless of intent or the need to prove negligence; simply the fact that injury or damage occurred makes the party liable. Strict liability’s reach is essentially limited to: Products liability; Ultra hazardous operations; Care and keeping of animals (especially those with a propensity towards viciousness, make the owner strictly liable for any injury the animal causes); and strict liability by statute.

Strict liability by statute

Some jurisdictions modify laws such that specific actions resulting in injury automatically make the offending party liable just because of the action.

Subjective risk

The perceived amount of risk based on an individual’s or organization’s opinion.

Subrogation

Individuals or entities suffering injury and/or damage due to the negligence of another person or entity have the right to recover costs and expenses from the at-fault party. If, however, the injured party chooses to seek reimbursement from its own insurance carrier, the rights of the injured party are transferred to the insurance carrier. Subrogation rights for the insurance carrier flow from the right of its insured to recover payment. If the insured does not have the right to recover payment, neither does its insurance carrier. Contractual risk transfer provisions often limit the rights of

Superseding event

An event that breaks the chain of causation or is not reasonably foreseeable, relieving the original wrongdoer of liability for any injury or damage following such an event. Also known as a supervening event.

Supplementary Payments

Provide extra coverage over and above the insured’s limit of liability; commonly included are defense costs, first aid expenses, bond premiums, and post-judgment interest.

Supply bond

Type of surety bond that guarantees that a supplier will furnish supplies, products, or equipment at an agreed-upon time and price.

Surety

In bonds, the party (often the insurance company) that agrees to be responsible for loss that may result if the principal does not keep his promise.

Surety bond

Bond that guarantees that someone will perform faithfully whatever she agrees to do or that someone will make an agreed-upon payment to another party.

Surplus

The difference between what a company owns (assets) and what it owes (liabilities).

Survival

The preservation and protection, as fully as possible, of the individual’s or entity’s operational continuity, current financial resources, future financial opportunities, social contract, and public reputation.

Systemic risk

The potential for a major disruption in the function of an entire market or financial system.

Tangible property

Property that has a physical form.

Temporary partial disability

An injury from which the employee is expected to completely recover in some period of time with little or no long-term effects. A broken arm is a good example if this type of injury. Employees suffering temporary partial injuries can generally return to work under ‘light-duty’ assignments until the “temporary” condition heals.

Temporary total disability

A full recovery from the injury is expected, but for a period of time the employee is completely unable to work due to the injury. These types of injuries might require bed rest or hospitalization while the employee recovers.

Terrorism Risk Insurance Act of 2002

Federal law designed to ensure that insurance coverage for terrorism losses under commercial lines policies will be available and affordable; it requires insurers to pay a specified amount for terrorism losses in a given calendar year; once that limit is reached, the federal government will reimburse insurers 85% of insured losses that exceed the limit.

Theatrical property coverage form

Filed commercial inland marine form that covers scenery, props, and costumes used by a theater group in a specific production.

Theft

In crime insurance, a broad term encompassing any unlawful taking of property, including burglary and robbery.

Theoretical probability

Probability that is based on theoretical principals rather than on actual experience.

Third party loss

A liability loss.

Time doctrine

All business income losses are settled based on the coverage limit purchased. An accurate business income coverage limit calculation depends on the legitimate estimation of the worst-case period of restoration. Estimating the worst-case period of restoration necessitates understanding the time required to accomplish each of the 10 steps in the four period of restoration objectives. The key to business income is the correct estimation of time.

Time element coverage

Coverage for the loss of business income over a period of time that results from direct physical loss.

Tort

A civil wrong for which monetary damages may be provided; does not include losses arising out of contracts.

Tortfeasor

The person (natural or legal) who infringes on the rights of another person.

Tortuous act

The infringement of a right.

Towing and labor costs endorsement

Personal auto policy endorsement that covers towing and the costs of labor performed at the site the car was disabled.

Trailer interchange insurance

A coverage provided under the truckers and motor carrier coverage forms; covers damage to a specific trailer under the policy of the trucker who has possession of the trailer at the time of loss, provided that: the trucker is liable for the damage under a written interchange agreement, and the damage is caused by a covered peril.

Transfer

A risk financing technique by which the financial responsibility for losses and variability in cash flows is shifted to another party.

Transferee

The party accepting the risk in a contractual risk transfer agreement. This can include the general contractor and subcontractors. Other common terms include indemnitor and promisor.

Transferor

The party from who risk is being transferred in a contractual risk transfer agreement. This may include the owner, the project management firm, and/or the general contractor. Other common terms for the transferor include indemnitee and promisee.

Trespasser

A person who is on the premises without the property owner’s express or implied permission.

Trip transit policy

Nonfiled commercial inland marine policy that covers a single shipment of goods.

Truckers coverage form

Commercial auto coverage form written specifically for the trucking industry.

Trustee

Someone who has the legal title to a property but is responsible that it be used, handled and transferred solely for the benefit of the beneficiary.

Twisting

Illegal activity in which an agent convinces a prospect to cancel existing insurance and buy another policy from the agent to the detriment of the prospect.

Ultra hazardous operations

Also known as an ‘inherently dangerous activity.’ Within the rule of strict or absolute liability, an ultra hazardous operation is where the owner of land conducts or allows the conduct of an activity or operation which is dangerous to the neighbors in the immediate area by the activity’s very nature.

Umbrella policy

Type of policy that provides broad coverage for an insured’s liability over and above liability covered by an underlying contract; may also cover losses that are excluded by the underlying policy; available as personal or commercial insurance.

Uncertainty

Three requirements within the definition of risk: 1) no one knows what is going to happen, 2) no one knows if what could happen, will happen; and 3) no one knows how catastrophic the outcome might be.

Unconscionable

A contract or contract provision that is unreasonable due to the unequal bargaining strength of the parties, or the result of undue influence or unfair tactics.

Underinsured motorists coverage

Auto coverage that pays the difference between the insured’s actual damages for bodily injury and the amount of liability insurance carried by the at-fault driver; may be added to the personal or commercial auto policy by endorsement.

Underwriting

Insurance company function that involves researching and evaluating insurance applicants to decide which ones are acceptable to the company as insureds.

Underwriting expenses

One of the components used to calculate the expense ratio; includes all costs required to acquire and maintain a book of business, such as expenses for commissions, salaries, and other administrative and regulatory costs.

Unfair discrimination

Applying different standards to insureds that have the same risks of loss.

Unfunded loss reserves

Little more than an accounting mechanism to note that a loss has occurred and denote that some specific amount may be required to pay the cost of a loss (or losses).

Unilateral contract

A type of contract that is one sided; an insurance policy is one sided because only the insurance company is legally bound to perform its part of the agreement.

Uninsured motorists coverage

Automobile coverage designed to provide protection for the insured if she is involved in an accident in which an uninsured motorist is at fault; uninsured motorists include those who do not carry insurance, motorists whose insurance does not meet the state’s minimum financial responsibility laws, drivers whose insurance companies are insolvent, and hit-and-run drivers who cannot be identified.

Unit improvements and betterments

Like ‘unit property’ benefit none but the unit owner. A unit improvements and betterments is created by the unit owner’s engagement in any activity or improvement that increases the value of the real property within an individual unit

Unit property

Defined by the association’s declarations or statute and is limited to and benefits none but the unit owner. The inside of the exterior walls, interior partition walls, counter tops, cabinetry, plumbing fixtures, appliances and any other real property confined to the unit are examples.

Unoccupancy

The absence of people from a premises; property coverage is often restricted if there are long periods of unoccupancy.

Use and file

Method of rate and form ratification used by some state insurance departments that requires insurance companies to file rates and forms within a certain period of time after they are first used.

Utility services

Direct damage coverage endorsement

Utility services

Time element coverage endorsement

Utmost good faith

A characteristic of insurance contracts meaning 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.

Vacancy

The absence of both people and property from a premises; property coverage is often restricted when there are long periods of vacancy.

Valuable papers and records insurance

Filed commercial inland marine form that provides coverage for valuable papers such as manuscripts, blueprints, records, and other printed documents.

Valuation

Method used by the insurance company to determine the appropriate payment for a loss.

Value reporting endorsement

Endorsement used with the commercial property coverage part to provide coverage based on the actual values of property at certain locations at specific times.

Valued policy

Policy written for a specified amount that lists the value of the insured property as agreed to by both the insured and the insurer; this amount is used to value losses; also called an agreed amount policy.

Vandalism and malicious mischief (V&MM)

Coverage provided in many property insurance policies that protects property against damage caused by vandals.

Vicarious liability

Liability that a person or business incurs because of the actions of others, such as family members or employees; also called imputed liability.

Void

As if it never existed. You never had a legal policy

Voluntary compensation endorsement

Endorsement used with the workers’ compensation and employers liability policy that adds coverage for employees who are excluded from the state’s workers’ compensation law.

Waiver

The intentional relinquishment of a known right.

Warehouse to warehouse clause

Provision found in ocean marine cargo policies that extends coverage for the cargo from its point of origination to its point of destination.

Warranty

A specific agreement between the insured and the insurer that becomes a part of the insurance policy; a breach of warranty can void the policy.

Watchperson

As defined in crime insurance forms, someone retained specifically by the insured whose sole duty is to have care and custody of property inside the premises.

Watercraft endorsement

Homeowners policy endorsement that provides coverage for BI or PD arising out of the use of watercraft.

Watercraft package policy

Package policy that provides property, liability, and medical payments coverage for losses arising out of the ownership, maintenance, or use of watercraft.

Workers’ Compensation and Employers Liability Policy

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; also covers the insured’s liability for work-related injuries under common law.

Written premium

One of the components used to calculate the expense ratio; it is the gross amount of premium income on the company’s books, which includes both earned and unearned premium.

Zone of danger

Could the person have been injured by the negligent actions of another? If so, that person is considered to be within the “zone of danger.” Most jurisdictions allow bystanders in this zone of danger to sue for negligent infliction of emotional distress even if they are not physically injured.