Accrual - A fixed, mathematically projected, monetary measurement, used to reserve pending expenses. This term is often used when an insurance policy is auditable. For example, a General Liability or Workers Compensation policy can be subject to additional or return premiums utilizing a basis of estimated versus actual payroll or revenue. By using accruals, an insured can reserve for the year-end premium audit adjustment.

Act of Civil Authority Coverage - Civil Authority coverage allows recovery of lost business income and expenses if a business is forcibly shut down as a result of the actions of state or local authorities due to damage to property other than the insured's. For example, an Act of Civil Authority coverage would apply if the insured's property is accessible only by going over a public bridge that leads to their parking lot, and the bridge is closed by a civil authority due to the possibility of collapse.

Act of God - An accident or event resulting from natural causes, without human intervention or agency, which could not have been prevented by reasonable foresight or care. Floods, lightning, earthquakes, mudslides and hurricanes are a few common examples.

Additional Insured - A person or organization that is not automatically included as an insured under an insurance policy but is included or added at the request of the named insured. A named insured's impetus for providing additional insured status to another may be a desire to protect the other party because of a close relationship with that party, or to comply with a contractual agreement requiring the named insured to do so.

An additional insured is protected by an insurance policy for claims arising out of his or her negligence only if the incident arose out of his or her work with the named insured. An additional insured does not have the same rights or obligations as a named insured. For example, an additional insured does not the right to make changes to the policy and is not obligated to pay for the policy.

Admitted Insurer - An insurer licensed to do business in the state or country in which the insured exposure is located. Admitted insurance is in contrast to non-admitted or surplus lines insurance. Admitted Insurers' rating structures, policy forms and endorsements are filed, reviewed and approved by the jurisdiction.

Best's Rating - A.M. Best Company developed and publishes this annual rating system that indicates insurers' financial conditions. Ratings resemble grades on a report card and range from A++ (Superior) through C+ (Marginal) and continue all the way down to D (Poor), E (Under Regulatory Supervision), F (In Liquidation), and S (Rating Suspended).

Blanket Additional Insured - An endorsement sometimes attached to liability insurance policies that automatically grants insured status to a person or organization that the named insured is required by contract to add as an insured.

Blanket Fidelity Bond - Coverage for employee theft of money, securities, or property, written with a "per loss" limit instead of a "per employee" or "per position" limit.

Breach of Contract - A material failure to fulfill one's contractual obligations. Because a breach of contract is considered a business risk within the control of the insured, insurance policies typically do not cover liabilities arising out of them.

Business Auto Coverage - Insurance coverage for corporately owned vehicles that are subject to compulsory or financial responsibility law or other motor vehicle insurance law. Coverages typically include auto liability and auto physical damage coverages.

Business Income Coverage - Commercial property insurance covering loss of income when damage to a business' premises by a covered cause of loss results in a slowdown or suspension of operations. Coverage applies to loss suffered during the time required to repair or replace the damaged property. It may also be extended to apply to loss suffered after completion of repairs for a specified number of days.

Business Interruption Coverage - Coverage for Business Income and Extra Expenses resulting from suspended operations due to a covered peril. Coverage applies during the time required to rebuild or repair the property (the Period of Restoration) plus an Extended Period of Indemnity Coverage that may be available in the policy.

Certificate of Insurance - Provides evidence that certain general types of insurance coverage and the party required to furnish the certificate has purchased limits. A certificate of insurance is not adequate to establish what the insurance actually covers; it is only proof insurance is in place. In addition, a certificate of insurance that leaves the "Description of Operations" section blank does not transfer the risk of the certificate holder.

Claim - A formal request to an insurance company from the insured requesting payment based on the terms of the insurance policy.

Claims Made - An insurance policy that triggers coverage when claims are reported or filed. This is in contrast to an Occurrence policy, which triggers the policy that was in force when the alleged wrongful act/accident occurred, regardless of when the claim is made/lawsuit is filed.

Claims-made policies are commonly associated with professional liability policies, such as Directors & Officers and Employment Practices Liability.

A claims-made policy states that a claim must be made during the policy period or the extended reporting period, if applicable. Because no two policies are exactly the same, a basic knowledge of the claims-made policy, including the definition of a claim, the definition of a wrongful act and the claim reporting provisions, is essential to understanding this type of coverage.

Collision Coverage - Automobile insurance that provides for reimbursement for loss to a covered automobile due to its colliding with another vehicle or object or the overturn of the automobile. This covers only damage to the automobile itself as "auto" is defined in the policy. This term should not be confused with Comprehensive Physical Damage Coverage.

Comprehensive Physical Damage Coverage - Insures against loss of or damage to an automobile resulting from numerous causes, such as fire, theft, windstorm, flood and vandalism. This term should not be confused with Collision Coverage.

Concealment - The willful act of holding back information "concealment" that may be pertinent to the issuance of an insurance policy even though the insured was not asked about that particular subject. A concealment can result in the voiding of a policy.

Continuity Date - The date in which an insured most recently answered the question "Are there any circumstances you are aware of that may give rise to a claim?" This is known as a Warranty Question. This term is most often used in the context of a claims-made policy such as errors & omissions, employment practices and directors & officer's liability insurance programs. The insured's answer to this question could materially impact the ability to access coverage if it is later found he or she knew of a circumstance prior to the date in which the warranty question was answered.

Contractual Liability - Protects the insured in the event a loss occurs for which he has assumed liability, express or implied, under a written contract.

Contractual Risk Transfer - The use of contractual obligations such as indemnity and exculpatory agreements, waivers of recovery rights, and insurance requirements to pass along to others what would otherwise be one's own risk of loss. Contractual Risk Transfer Techniques are the most efficient way to mitigate risk when formal insurance policies are not necessary.

Cost of Risk - The cost of managing risks and incurring losses. Total cost of risk is the sum of all aspects of an organization's operations that relate to risk, including retained (uninsured) losses and related loss adjustment expenses, risk control costs, transfer costs and administrative costs.

Comparative Negligence - This rule is used in negligence cases in some states to provide for computing both the plaintiff's and the defendant's negligence, with the plaintiff's damages being reduced by a percentage representing the degree of his or her contributing fault. The plaintiff will receive nothing if his or her negligence is found to be greater than the defendant's.

Compensatory Damages - The sum of money to which a plaintiff is entitled that, to the extent possible, makes amends for the actual loss sustained.

Contributory Negligence - Negligence of a plaintiff constituting a partial cause or aggravation of his or her injury. This doctrine bars relief to the plaintiff in a lawsuit if the plaintiff's own negligence contributed to the damage. Alabama, the District of Columbia, Maryland, North Carolina and Virginia are the only jurisdictions that still apply pure contributory negligence.

Deductible - The amount the insurer will deduct from the loss before paying up to its policy limits. Most property insurance policies contain a per-occurrence deductible provision that stipulates that the deductible amount specified in the policy declarations will be subtracted from each covered loss in determining the amount of the insured's loss recovery. Usually, the amount of the deductible is not subtracted from policy limits. In property insurance, the entire policy limit typically applies once the deductible is met. In liability insurance, the deductible amount typically reduces the policy limit.

Denial of Service Attack - A deliberately planned attack on a computer system or network that causes a loss of use of the computer system or network to legitimate users. Examples of Denial of Service Attack attacks include flooding network connections to prevent legitimate network traffic, denying communication between systems, preventing a particular individual from accessing an Internet-based service and disrupting service to a specific system or individual.

Directors and Officers (D&O) Liability Insurance - A type of liability insurance covering directors and officers for claims made against them while serving on a board of directors and/or as a corporate officer.

Disability Income Insurance - Health insurance that provides periodic payments to replace income lost when the insured is unable to work as a result of sickness or injury.

Earned Premium - This portion of a policy's premium applies to the expired portion of the policy. Although insurance premiums are often paid in advance, insurers typically "earn" the premium at an even rate throughout the policy term. The unearned portion of the premium that has been paid is kept in the "unearned premium reserve."

EE0-1 Report (Employer Information Report) - This survey form requires employers to designate employees into five major racial/ethnic designations used by the Equal Employment Opportunity Commission (EEOC). Mandated under Title VII of the Civil Rights Act of 1964 and amended by the Equal Employment Opportunity Act of 1972, it is a requirement of employers with 100 or more employees and employers that are government contractors with more than 50 employees. The EEOC designations in the form, which is due before September 30 each year, are White (not of Hispanic origin), Black (not of Hispanic origin), Hispanic, Asian or Pacific Islander, and American Indian or Alaskan Native.

Employment Practices Liability (EPL) Insurance - Covers wrongful acts arising from the employment process. The most frequent types of claims covered under EPL insurance include wrongful termination, discrimination, sexual harassment and retaliation. In addition, the policies cover claims from a variety of other types of inappropriate workplace conduct, including (but not limited to) defamation, invasion of privacy, failure to promote, deprivation of a career opportunity and negligent evaluation. The policy covers directors and officers, management personnel and employees.

Endorsement - This insurance policy form either changes or adds to the provisions included in one or more other forms used to construct the policy, such as the declarations page or the coverage form. Insurance policy endorsements may broaden the scope of coverage, limit or restrict the scope of coverage, clarify the application of coverage to some unique loss exposure, add other parties as insureds, or add locations to the policy. They often effect these changes by modifying the existing insuring agreement, policy definitions, exclusions, or conditions in the coverage form or adding additional information, such as insured locations, to the declarations page.

Experience Mod - A factor developed by measuring the difference between the insured's actual past experience and the expected or actual experience of the class. This factor may be either a debit or credit and, therefore, will increase or decrease the standard premium in response to past loss experience. When applied to the manual premium, the experience modification produces a premium that is more representative of the actual loss experience of an insured. An employer with average experience has a modifier of 1.0 and would pay the manual premium. Employers with poorer loss experience would have modifiers greater than 1.00 and would pay more than manual premium. Those with good experience would have modifiers below 1.00 and pay less than manual premium.

Extended Period of Indemnity - Additional Business Income Coverage for a period of days (30 is the standard) after the full restoration of a business that has been previously interrupted due to a covered cause of loss such as fire. This coverage is necessary because a property policy's business interruption coverage ceases when the period of restoration is complete. For example, a company may not be operating as efficiently as it had been prior to the event immediately after operations have been restored.

Fiduciary - An individual or corporation who exercises discretionary authority or discretionary control in managing a pension or benefit plan or exercises any authority or control in managing or disposing of its assets; renders investment advice for a fee or other compensation, with respect to money or other property belonging to the plan; or has any discretionary authority or responsibility in administering the plan.

Fiduciary Liability Insurance - Provides coverage for the personal liability of fiduciaries for allegations of "lack of particular care" when managing a pension/401(K) and other retirement programs.

Force Majeure - A clause inserted in contracts to remove liability for natural and unavoidable events that interrupt the expected course of activities and restrict participants from fulfilling obligations.

General Exclusions - In workers compensation insurance, operations that are specifically excluded from the basic classifications and are always separately classified unless specifically included in the basic classification wording.

General Inclusions - In workers compensation insurance, operations that are to be included in all the basic classifications, even though they may appear to be separate operations. This rule holds true unless the risk operates as a separate business or is specifically excluded from the classification wording, or the governing business is categorized as a standard exception.

General Liability (GL) - Insurance protecting commercial insureds from most liability exposures other than automobile and professional liability.

Gross Negligence - An act of willful and wanton misconduct.

Hazard - Conditions that increase the probability of loss. Examples include poor housekeeping in a factory, insufficient automobile maintenance and inadequate lighting in a crime-prone area.

Hold Harmless Agreement - A contract between two parties designed to release one or both parties from legal claims. Most often, one party agrees not to sue the other party for any expenses, damages, or losses arising from a transaction or activity between the two parties.

Identity Theft Coverage - Optional endorsement available under a homeowners policy to insure a criminal event in which an imposter obtains key pieces of personal information in order to impersonate the insured. The information can be used to obtain credit, merchandise, and services in the name of the victim, or to provide the thief with false credentials.

Idiopathic Injury - An injury that arises spontaneously with no identifiable cause.

Incurred Losses - Paid losses plus outstanding losses.

Indemnify - To make compensation to an entity, person or insured for incurred injury, loss or damage.

Indemnity - Restoration to the victim of a loss up to the amount of the loss.

Indemnity Bond - A bond indemnifying an obligee against loss that arises as a result of a failure on the part of a principal to perform as required.

Indemnity Clause - A contract between two parties designed to release one or both parties from legal claims. Most often, one party agrees not to sue the other party for expenses, damages, or losses arising from a transaction or activity between the two parties.

Indemnity Contract - An agreement to pay on behalf of another party under specified circumstances. An insurance policy is an indemnity contract.

Job Safety Analysis - Involves a detailed analysis of each step integral to a particular task. This process includes listing and categorizing all the hazards to persons and property that might impact each step and detailing all reasonable mechanical, procedural and managerial safeguards against each hazard. The main goal is to make each task and the overall process subject to appropriate risk control techniques, leading to greater workplace safety.

Key Man Insurance - Life insurance owned by a business entity on the life of a key individual that will, in the event of his or her death, offset a loss in earnings and provide funds necessary to find, hire, and develop a replacement. Key Man Insurance is designed to also offset losses resulting from reduced sales, interruption of a vital research project, flow of production or an impaired credit standing.

Known Loss Provision - Language commonly included in the insuring agreement of a liability policy that stipulates the policy does not apply to losses of which the insured was aware prior to the policy period.

Known Loss Rule - The principle of insurance practice that states coverage may not be obtained against a loss that has already occurred and is known to the person seeking to obtain the coverage.

Laptop Exclusion - An exclusion found in cyber and privacy insurance policies that excludes coverage for both first-party property and third-party liability claims caused by lost or stolen laptop and notebook computers. Some versions of this exclusion also preclude coverage for losses involving other types of portable electronic devices such as iPhones, iPads, tablets and flash drives.

Law Enforcement Officers Liability - Provides errors and omissions coverage for police departments. Unlike most professional liability coverage, such policies are often written on an occurrence (rather than on a claims-made) basis. Some of the more important covered acts include false arrest, excessive force and invasion of privacy. Common exclusions are criminal/intentional acts, claims for injunctive relief and motor vehicle operations.

Liability - Any legally enforceable obligation. Within the context of insurance, the obligation to pay a monetary award for injury or damage caused by one's negligent or statutorily prohibited action.

Liability Limits - The stipulated sum beyond which an insurance company is not liable for payments due to a third party. The insured remains legally liable above the limits.

Libel - The written publication of untrue, defamatory statements that lower a person's esteem in his or her community and that gives rise to a legal cause of action against the publisher. Standard commercial general liability insurance policies apply to slander and libel claims made against the insured. While libel refers to defamatory statements that are written, slander refers to defamatory statements that are spoken.

License and Permit Bond - Required by a municipality or other public body as a condition to granting a license or permit to engage in a specified activity, this bond guarantees that the party seeking the license or permit (the obligor) will comply with applicable laws or regulations.

Lien - A legal claim against or financial interest in the property of another, usually created by having performed work on or advanced funds in connection with the property.

Limitation of Liability Law - This contractual provision places a limit on the amount of liability one party to the contract may have to the other party. Frequently used to equalize the imbalance between the potentially enormous risks assumed in performing a contract, as related to the relatively small profit or fee received for that performance.

Limitation of Risk - The maximum amount an insurer or reinsurer can be obligated to pay in a one-loss event.

Limit of Insurance - The most that will be paid by the insurer in the event of a covered loss under an insurance policy.

Long Tail Liability - The liability for claims that do not proceed to final settlement until a length of time beyond the policy year. High incurred but not reported (IBNR) claims contribute to this "tail" effect, since these losses are usually not settled until several years after the expiration of the policy in question.

Long-Term Disability (LTD) Insurance - LTD insurance replaces earnings lost due to illness or disability occurring on or off the job.

Loss Control - This risk management technique seeks to reduce the possibility that a loss will occur and/or reduce the severity of those that do occur.

Managing General Agent (MGA) - A specialized type of insurance agent/broker who is vested with underwriting authority from an insurer. Accordingly, MGAs perform certain functions ordinarily handled only by insurers, such as binding coverage, underwriting and pricing, appointing retail agents within a particular area, and settling claims.

Typically, MGAs are involved with lines of coverage in which specialized expertise is required to underwrite the policies.

Mediation - The act of a third person in assisting two adverse parties in adjusting or settling their dispute.

Misrepresentation - A false or misleading statement that, if intentional and material, can allow the insurer to void the insurance contract.

Modification Factor - The factor by which a standard workers compensation premium is multiplied to reflect an insured's actual loss experience.

Moonlighting Coverage - An endorsement available under professional liability policies, nearly always in police professional/law enforcement policies. Moonlighting endorsements cover insureds for their liability in connection with off-duty law enforcement activities. Coverage is available in recognition of the fact that it is not uncommon for law enforcement officers to hold second jobs.

Moral Hazard - A subjective hazard that tends to increase the probable frequency or severity of loss due to an insured peril. Moral hazard is measured by the character of the insured and the circumstances surrounding the subject of the insurance, especially the extent of potential loss or gain to the insured in case of loss.

Named Insured - Any person, firm, or organization, or any of its members specifically designated by name as an insured(s) in an insurance policy, as distinguished from others that, although unnamed, fall within the policy definition of an "insured."

Negligence - A tort involving failure to use a degree of care considered reasonable under a given set of circumstances. Acts of either omission or commission, or both, may constitute negligence.

Negligent Entrustment - Failure to exercise the appropriate degree of care in allowing someone else to operate or use one's auto, aircraft or watercraft.

Negligent Evaluation - A type of employment-related claim in which an employee plaintiff asserts the employee's performance evaluation was excessively negative, unfairly low, or otherwise inaccurate and therefore did not reflect the employee's actual, higher level of performance.

Negligent Retention - A type of employment-related claim in which a plaintiff asserts that an employer failed to discharge an employee who management knew, or should have known, had a propensity toward violence, sexual harassment or dishonesty.

Notice - The knowledge of facts that would cause a reasonably prudent person to take action.

Notice of Claim Provision - A provision in a liability insurance policy requiring the insured to promptly notify the insurer in the event that a claim is made against the insured.

Notice of Occurrence - One of the insured's specified duties under a general liability policy. Notice to the insurer of an occurrence must include the time, place, and circumstances of the occurrence, a description of any resulting injury or damage, and the names and addresses of injured persons and witnesses.

Notice of Cancellation/Nonrenewal Clauses - Provisions in policies mandating that insurers are to provide advance notice of cancellation or nonrenewal of a policy. Most commonly, the required cancellation notice period is 30 days, although state amendatory endorsements frequently extend this period to 60 days.

Occurrence Basis - For coverage to be provided, the act giving rise to a claim needs to occur within the policy period. The claim does not need to be reported during the policy period.

Occurrence Policy - A policy covering claims that arise out of damage or injury that took place during the policy period, regardless of when claims are made.

Off-Duty Coverage - Coverage for police officers' personal liability exposure while moonlighting or otherwise off duty. This exposure is typically excluded in most law enforcement liability policies. However, coverage can usually be added by endorsement for an additional premium.

Open Perils - Refers to property insurance that insures against loss to covered property from all causes except those that are specifically excluded.

Operational Risk - The risk of loss from everything other than credit, market and interest rate risks. It is the risk of human, process, system, or technological failure, as well as risks leading from external events such as event risk.

Organizational Risk - The business, treasury, and pure risks of an organization, which collectively create uncertainty as to the financial outcome of an enterprise.

Outstanding Losses - Losses that have been reported to the insurer but are still in the process of settlement.

Owners and Contractors Protective Liability Coverage - This stand-alone policy covers the named insured's liability for bodily injury and property damage caused, in whole or in part, by an independent contractor's work for the insured. The contractor purchases the policy to provide coverage for vicarious liability the client (project owner) incurs as a result of the contractor's acts or omissions on the project. This policy also responds to liability arising out of the insured's own acts or omissions in connection with its general supervision of the contractor's operations.

Pari Passu Rule - The general principle of English insolvency law holding that all unsecured creditors must be treated equally.

Policyholder - Person in actual possession of an insurance policy.

Power of Attorney - Authority given one person or organization to act on behalf of and obligate another.

Prior Acts Coverage - A feature of claims-made policies that have either no retroactive date or a retroactive date earlier than the inception date of the policy.

Professional Liability - Liability coverage designed to protect traditional professionals and quasi-professionals against liability incurred as a result of errors and omissions in performing their professional services. Most professional liability policies only cover economic or financial losses suffered by third parties, as opposed to bodily injury and property damage claims. This is because the latter two types of loss are typically covered under commercial general liability policies.

Proof of Loss - A formal statement made by the insured to the insurer regarding a claim, so the insurer may determine its liability under the policy.

Pro Rata - Proportionately

Proration - The adjustment of policy benefits due to a change of exposure or existence of "other insurance."

Protective Safeguards Endorsement - A property insurance endorsement that makes it a condition of coverage that the protective safeguards cited in the endorsement (such as an automatic sprinkler system or night watch guard) be in operation at all times except when the insurer has been notified of the impairment in protection. Failure to maintain the protective safeguards in good working order or failure to notify the insurer of even a temporary impairment in protection suspends coverage until the protection is restored.

Punitive Damages - Damages in excess of those required to compensate the plaintiff for the wrong done, which are imposed in order to punish the defendant because of the particularly wanton or willful nature of his or her wrongdoing.

Pure Risk - The risk involved in situations that present the opportunity for loss but no opportunity for gain. Pure risks are generally insurable, while speculative risks (which also present the opportunity for gain) generally are not.

Quid Pro Quo - Pertains to the exchange of values by both parties to form a valid contract. In workers compensation, employees trade their right to sue their employers in exchange for no-fault benefits. This is considered the quid pro quo in workers compensation.

Quid Pro Quo Sexual Harassment - A form of sexual harassment, such as unwelcome sexual advances or requests for sexual favors when submission to such conduct is made a condition of an individual's employment, and submission to or rejection of such conduct is used as a basis for employment decisions affecting the individual who is receiving such advances or requests. Claims alleging quid pro quo sexual harassment are afforded coverage under employment practices liability policies.

Rate - The amount of money necessary to cover losses, cover expenses and provide a profit to the insurer for a single unit of exposure.

Rating - Determining the amount of premium to be paid to insure or reinsure a risk. Guaranteed cost rates are fixed during the policy period. Loss sensitive rates are those that can be adjusted after the end of a policy period, based upon the insured's actual loss experience.

Recurrent Disability - A period of disability resulting from the same or a related cause of a prior disability.

Reporting Lag - The span of time between the occurrence of a claim and the date it is first reported to the insurer.

Reputational Risk - The risk that negative publicity regarding an institution's business practices will lead to a loss of revenue or increased litigation.

Rescission - With respect to a directors and officers liability insurance policy, a declaration by an insurer that the policy was never in effect, the result being that coverage for a claim, when tendered by a corporate organization to an insurer, is not covered.

Reservation of Rights - An insurer's notification to an insured that coverage for a claim may not apply. Such notification allows an insurer to investigate (or even defend) a claim to determine whether coverage applies (in whole or in part) without waiving its right to later deny coverage based on information revealed by the investigation. In reserving its rights to later deny coverage, the insurer is merely informing the insured of its concerns that the claim, in whole or in part, may not be covered under the policy, pending further investigation.

Rider - A form that is attached to a surety or fidelity bond that alters the provisions of the bond form.

Risk - Uncertainty arising from the possible occurrence of specific events.

Risk Appetite - The degree to which an organization's management is willing to accept the uncertainty of loss for a given risk when it has the option to pay a fixed sum to transfer that risk to an insurer.

Risk Capital - Capital required to finance the consequences of business risks.

Risk Control - The technique of minimizing the frequency or severity of losses with training, safety and security measures.

Risk Identification - The qualitative determination of risks that are material—that is, that potentially can impact the organization's achievement of its financial and/or strategic objectives

Risk Management - The practice of identifying and analyzing loss exposures and taking steps to minimize the financial impact of the risks they impose.

Risk Management Process - The process of making and implementing decisions that will minimize the adverse effects of accidental business losses on an organization.

Risk Management Techniques - Methods for treating risks. Traditional risk management techniques include risk retention, contractual or noninsurance risk transfer, risk control, risk avoidance and insurance transfer.

Risk Manager - An individual responsible for managing an organization's risks and minimizing the adverse impact of losses on the achievement of the organization's objectives.

Risk Prioritization - The ranking of material risks on an appropriate scale, such as frequency and/or severity.

Risk Profile - A measure of expected losses for a finite time period based on various items of historical data such as total losses, number of losses, average loss size and payout patterns.

Risk Reduction - Measures to reduce the frequency or severity of losses.

Risk Retention - Planned acceptance of losses by deductibles, deliberate noninsurance, and loss-sensitive plans where some, but not all, risk is consciously retained rather than transferred.

Risk Tolerance - The willingness of an organization to incur risk to gain future reward.

Schedule Bond - A fidelity bond in which covered persons (usually employees) are listed by name, with a corresponding coverage limit for each individual listed.

Sharpe Ratio - A measurement often used to synthesize risk into an easy-to-understand metric.

Sleep Insurance - Catastrophe insurance coverages that allow management to sleep at night.

Specialty Risks - Used by commercial insurers to describe unusual coverage features or types of risks not underwritten by most insurers.

Standard Exceptions - Certain classes of employees in workers compensation insurance who are common to many types of business and are separately rated, unless included specifically in the wording of the governing occupational classification. Some exceptions include clerical employees, drivers and salespersons.

Statutory Insurance - Insurance the insured is required to buy under a country, state or federal law.

Stipulation - An informal "agreement" reached between the parties.

Strategic Risk - Exposure to uncertainty arising from long-term policy decisions.

Sublimit - A limitation in an insurance policy on the amount of coverage available to cover a specific type of loss.

Submission - An insurance proposal submitted to an underwriter.

Surety - A party that guarantees the performance of another.

Surety Bond - A contract under which one party (the surety) guarantees the performance of certain obligations of a second party (the principal) to a third party (the obligee).

Surplus Line - Risks placed with nonadmitted insurers.

Surplus Lines Insurance - Refers to coverage lines that need not be filed with state insurance departments as a condition of being able to offer coverage.

Terrorism Endorsement - A provision attached to an insurance policy that restricts, excludes, or otherwise explains coverage for loss due to terrorist acts.

Terrorism Insurance - Insurance covering loss due to acts of terrorism.

Third-Party Claims - Liability claims brought by persons allegedly injured or harmed by the insured.

Third-Party Risk - The risk of losses to third parties.

Tort - A civil or private wrong resulting in legal liability.

Transfer of Risk - A risk management technique whereby risk of loss is transferred to another party through a contract.

Umbrella Liability Policy - Designed to provide protection against catastrophic losses, this policy generally is written over various primary liability policies. The umbrella policy provides excess limits when the limits of underlying liability policies are exhausted by a claims payment, drops down and picks up where the underlying policy leaves off when the aggregate limit of the underlying policy in question is exhausted by the payment of claims and provides protection against some claims not covered by the underlying policies.

Underwriter - A person responsible for making decisions regarding the acceptability of a particular insurance submission and of determining the amount, price and conditions under which the submission is acceptable.

Unplanned Retention - Retention of losses by an organization that fails to identify a loss exposure or fails or forgets to act on a loss exposure..

Valued Business Interruption Coverage - Business interruption coverage that provides for the payment of a stipulated amount for each day of fully interrupted operations, rather than for payment of the amount of loss actually sustained.

Vicarious Liability - A principal's liability for the acts of its agents. Vicarious liability can result from the acts of independent agents, partners, independent contractors, employees and children.

Waiver - The surrender of a right or privilege.

Waiting Period Deductible - A deductible provision sometimes used in business interruption and other time element policies, in lieu of a dollar amount deductible, that establishes that the insurer is not responsible for loss suffered during a specified period (such as 72 hours) immediately following a direct damage loss. This can also be a deductible mechanism in disability income policies and under workers compensation statutes that establishes a period that must pass following an accident or illness causing disability before salary continuation benefits are payable.

Wholesale Agent - An insurance agent who deals with retail agents and not directly with insureds. The wholesale agent serves as an intermediary between the retail agent and the insurer.

Wholesale Broker - An insurance broker who acts as an intermediary between a retail broker and an insurer, while having no contact with the insured. Wholesale brokers have direct contact with the insurer, whereas the retail agent who produced the business does not. The same broker can function as a retailer or wholesaler, depending on the specific situation.

Wholesale brokers often possess specialized expertise in a particular line of coverage or in a line of coverage that is unusual and/or have greater access to or influence with certain insurance markets, which is especially valuable when dealing with a difficult-to-place risk.

Worker's Compensation - The system by which no-fault statutory benefits prescribed in state law are provided by an employer to an employee or the employee's family due to a job-related injury or death resulting from an accident or occupational disease.

Workplace Violence Insurance - Coverage for expenses a company incurs resulting from workplace violence incidents.

Wrongful Death Claim - A claim made on behalf of survivors or beneficiaries of a person who has died as a result of either negligent or intentional wrongful conduct. Individuals who were financially dependent upon the deceased generally make such claims.