CAIB 2 – Quick Definitions (part 1)

Refers to policy on which coverage is provided only on that property which is specifically identified or scheduled

Refers to policy used to insure building, stock and equipment under a single limit of insurance

A policy under which all property owned by the insured is covered or “blanketed” by a single limit of insurance

Building improvements, alterations and betterments made at the expense of or purchased by the insured to a building occupied by the insured and which are not otherwise insured, providing the insured is not the actual owner of the building

The replacement or repair costs less depreciation

Represents the costs to repair, replace or rebuild the lost or damaged property without deduction for depreciation

Involves an insurer ceding part of the risk it has assumed to one or more other insurers

An insurance policy under which a group of insurers has agreed to participate in providing policy insurance coverages

Something imposed by the insurer which requires the insured to do or not do to something

Refers to the right of the insurer to “step into the shoes” of the party whom it has compensated and sue any party whom the compensated party could have sued

A promise that certain facts are as they are represented to be and that they will remain so

Facts which if communicated to the insurer would induce it either to decline the insurance altogether, or not accept it unless a higher premium is paid

To act willfully, and with the specific intent to deceive or cheat

One which has no “legal or binding force” and as such, “is incapable of being enforced by law

Buildings which have met minimum standards in terms of hours it will withstand a specific, carefully controlled test fire

All structural members, including floors, roofs, and their supports are constructed of steel, iron, concrete or other noncombustible materials. Falls just short of fire resistive

Conditions common to all buildings which influence their potential for loss

Refers to the proximity of the building insured or containing the property insured to other commercially rated buildings

Occurs when the applicants for insurance are largely those most likely to suffer a loss

Refers to the grouping or classifying of risks according to established criteria which, in large part, is based on their probability for loss as a class

Characterized by intense competition between insurers resulting in low rates and broader coverages

Occurs when low profit margins force out some of the competition resulting in a more disciplined underwriting approach where insureds receive little or nothing in rate discounts

A condition which may cause a peril to occur

Conditions relating to the use of tangible property which could cause a peril to occur

Subjective characteristics of the applicant that could cause a peril to occur

Business which is marginal or substandard but which the insurer agrees to accept as a favor or accommodation to the broker

Existence of other insurance policies the applicant has with the same insurer

Empty, or when the normal occupant is absent and the contents have been removed

Lack of habitual presence of human beings, or then premises are complete with its contents, except that such person who normally occupies the premises is temporarily away

An additional rate charged over and above the fire rate

The inertia of a body that tends to move it away from the center around which it revolves

A failure in the working mechanism of the machinery…a functional defect in the moving parts of the equipment which causes the latter to cease function or to function improperly

Failure in the electrical mechanism of the machinery, appliance or device

Types of losses which might be expected as a part of the every day operation of a business

Deterioration or depreciation in value by ordinary and reasonable use of the subject matter

Deterioration of an object which arises naturally over time

Hidden or concealed defect. One which could not be discovered by reasonable and customary inspection. A defect not apparent on the face of the goods

Something within a commodity, or other kind of property, that causes its demise over time

Disappearance under circumstances which cannot be explained

Changes the terms or conditions of the policy