Glossary of Terms

A - D | E - H | I - L | M - Q | R -T | U - Z

m

Malicious Mischief

Similar to vandalism.Purposely damaging the rights or property of another.

Market Value

The price a willing buyer would pay a willing seller under current market conditions.

n

Named Insured

Any person, firm, or corporation, or any member thereof, specifically designated by name as the insured(s) in a policy.

Negligence

Failure to use that degree of care which an ordinary person of reasonable prudence would use under the given or similar circumstances.A person may be negligent by acts of omission or commission or both.

Nonrenewal

Termination of insurance coverage at an expiration date or anniversary date.

Notice of Cancellation

Written notice by an insurer of intent to cancel insurance.

Nuisance Value

An amount that an insurance company will pay to settle a claim not because it is a valid claim but because the company considers it worth that amount to dispose of it.

o

Occurrence

An event that results in an insured loss.In some lines of insurance, it is distinguished from accident in that the loss does not have to be sudden and fortuitous and can result from continuous or repeated exposure which results in bodily injury or property damage neither expected nor intended by the insured.

Omnibus Clause

An agreement in most automobile liability policies and some others that by its definition of insured, extends the protection of the policy to others within the definition without the necessity of specifically naming them in the policy.

p

Paul Versus Virginia

The 1869 United States Supreme Court decision holding that insurance is not commerce and hence not subject to regulation by the federal government.This was the ruling decision with respect to insurance regulation until the SEUA case in 1944 which reversed that decision but which was later modified by Public Law 15.

Peril

The cause of a possible loss.

Physical Hazard

Any hazard arising from the material, structural, or operational features of the risk itself apart from the persons owning or managing it.

Poisson’s Law

The theory of probability, the mathematical principle upon which insurance is based.

Probability

The likelihood or relative frequency of an event expressed in a number between zero and one.The throw of a die is an example.

The probability of throwing five is found by dividing the number of faces that have a five (1) by the total number of faces (6).That is a probability of one-sixth, or one divided by six, which is .17.

Producer

A term applied to an agent, solicitor or other person who sells insurance.

Proof of Loss

A formal statement made by a policy owner to an insurer regarding a loss.It is intended to give information to the insurer to enable it to determine the extent of its liability.

Public Adjuster

An insurance adjuster who represents an insured on a fee basis in claims settlement.

Public Law 15

A Congressional Act of 1945 exempting insurance from federal anti-trust laws to the extent that it is regulated properly by states.

Punitive Damages

A term referring to damages awarded by a court against an insured or an insurer in addition to compensatory damages.Punitive damages are intended to punish for willful and wanton misconduct and serve as a deterrent.When awarded against an insurer, it is usually related to the conduct of the insurer in handling of a claim.

q

Quid Pro Quo

Latin for “this for that” or “one thing for another”.In insurance it could refer to the consideration in an insurance contract which calls for the exchange of values by both parties to the contract in order for it to be a valid contract.