Business Insurance Glossary
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A.M. Best rating
An independent opinion published by the A.M. Best Company of an insurer
Act of God
An unpreventable accident or event that is the result of natural causes; for example, floods, earthquakes, or lightning.
Actual cash value (ACV)
Actual Cash Value is the replacement cost of property damaged or destroyed at the time of loss with deduction for depreciation. Actual cash value cannot exceed the applicable limit of liability shown in the declarations of the policy, nor the amount it would cost to repair or replace such property with material of like kind and quality within a reasonable amount of time after a loss.
Additional insured
Also called Additional Interest. An individual or entity that is not automatically included as an insured under the policy of another, but for whom the named insured's policy provides a certain degree of protection. An endorsement is typically required to get additional insured status. The named insured's impetus for providing additional insured status to others may be a desire to protect the other party because of a close relationship with that party (e.g., employees or members of an insured club) or to comply with a contractual agreement requiring the named insured to do so (e.g., customers or owners of property leased by the named insured).
Additional named insured
An individual or entity, other than the first named insured, identified as an insured in the policy declarations or an addendum to the policy declarations. Such an individual or entity would have the same rights and responsibilities as an individual or entity named as an insured in the policy declarations (other than those rights and responsibilities reserved to the first named insured only).
Agent
An authorized representative of an insurance company who can help you decide what insurance coverages you need and help you update your insurance protection as needed. In every state and the District of Columbia, insurance agents are required to be licensed by the state
Agreed amount endorsement
This endorsement is an agreement made by the insurance company wherein it waives the coinsurance clause on the specified property. As long as this endorsement is in effect, there would be no coinsurance penalty at the time of a claim.
All-risk insurance
Insurance against loss or damage to property from any cause, except those that are specifically excluded. Most often associated with property coverage. An all risk policy is differentiated from a Named Perils insurance policy.
Annual aggregate
The maximum dollar amount that can be paid under a policy during a one-year period.
Annuity
Contract sold by insurance companies that pays a monthly (or quarterly, semiannual, or annual) income benefit for the life of a person (annuitant), for the lives of two or more persons, or for a specified period of time.
Antiselection
The tendency of individuals who believe they have a greater than average likelihood of loss to seek insurance protection to a greater extent than do those who believe they have an average or a less than average likelihood of loss.
Application
A form (paper or online) that is filled out by someone applying for insurance that contains information to help the insurance company assess whether to provide the requested coverage, and how much to charge for it.
Appraisal
Determines the value of property, or determines the extent of damage. Appraisals are usually conducted by an impartial expert.
Assessed value
The monetary worth of real or personal property as a basis for its taxation. This value, established by a governmental agency, is rarely used by insurers as a means to determine indemnification.
Asset risk
A measure of an asset's default of principal or interest or fluctuation in market value as a result of changes in the market.
