A glossary of commonly used general insurance and risk management terms.

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ACCIDENT – An unexpected event, which happens by chance and is not expected in the normal course of events.

ACT OF GOD – A sudden and violent act of nature, which could not have been foreseen or prevented. Examples: flood, earthquake.

ACTUAL CASH VALUE – The current cost of replacing an article with a similar one in the same condition. Any item has three basic values: original cost, actual cash value, and replacement value. For example, if you originally paid $400 for your living room couch; its actual cash value might be $175. But if it’s destroyed in a fire, replacing it will cost you $800.

ACTUAL LOSS SUSTAINED – a form of business interruption insurance that will pay for the loss suffered by the policy holder during the indemnity period and is not subject to any limit of insurance in the declarations of the policy.

ADDITIONAL INSURED – A person other than the named insured who is protected by the terms of the policy. Most automobile policies, for example, insure a specific individual as an insured, but also insure anyone driving with that insured’s consent. The additional insured may be “named” or “unnamed.”

ADDITIONAL INTEREST INSURED – Another person or company who may be liable for an accident involving an insured and who has been named as an Additional Interest Insured under the policy.

ADDITIONAL PREMIUM – An extra charge for an alteration, during the policy period, which increases the hazard or the company’s liability.

ADJUSTER – person who investigates a loss and negotiates settlement with the claimant on the company’s behalf.

ALL RISK – Coverage against loss or damage from all perils except those specifically excluded.

AMOUNT OF RISK – The company’s total liability at a specific location.

APPLICATION (APP) – A form on which the prospective insured states facts requested by the insurance company and on the basis of which (together with any information from other sources) the insurance company decides whether or not to accept the risk, modify the coverage offered, or decline the risk.

APPRAISAL – A valuation of property made for determining its insurable value or the amount or loss sustained.

ARSON – The willful and malicious burning of property.

ASSUMED LIABILITY – Liability, which would not rest upon a person except that he has accepted responsibility by contract expressed or implied. This is also known as contractual liability.

ASSURANCE – Same as “insurance.”

ASSURED – Same as “insured.”

ASSURER – Same as “insurer” (insurance company).

AS THEIR INTEREST MAY APPEAR – Phrase commonly used in the loss payable section of an insurance policy where the insurable interest in a property is either unknown or presently not ascertainable, e.g., “Loss payable to A and B as their interest may appear.” This leaves the whole question of title to the insurance monies to be settled between the insured and the person whose name appears in the loss payable portion of the policy.

AUTHORIZATION – The power or right to act on behalf of another.

AVOIDANCE OF RISK – Taking steps to remove a hazard, engage in an alternate activity, or otherwise end a specific exposure.

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