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Manuscript policies
Nonstandard, custom policies developed for one specific insured or for a small group of insureds, such as a business association, with unique coverage needs.
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Insuring agreement
A statement in an insurance policy that the insurer will, under described circumstances, make a loss payment or provide a service.
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Policy condition
Any provision that qualifies an otherwise enforceable promise made in the policy.
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Specified causes of loss coverage
A named perils coverage that covers loss caused only by the specifically listed perils.
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Special form coverage
Property insurance coverage covering all causes of loss not specifically excluded.
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Direct loss
A reduction in property value resulting immediately and proximately from damage caused by a covered cause of loss.
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Indirect loss
A loss that arises as a result of damage to property, other than the direct loss to the property.
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Compensatory damages
Compensation to claimants for their bodily injury or property damage.
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Special damages
A monetary award to compensate a victim for specific, out of pocket expenses incurred because of a loss, such as medical expenses, wage loss, funeral expenses, or repair bills.
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General damages
A monetary award to compensate a victim for losses, such as pain and suffering, that do not involve specific measurable expenses.
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Punitive damages
A payment awarded by a court to punish a wrongdoer for a reckless, malicious, or deceitful act and to deter similar conduct.
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Reserve
The amount the insurer estimates and sets aside to pay on an existing claim that has not been settled.
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Individual case method
A method of setting reserves based on the claim's circumstances and the claim representative's experience in handling similar claims.
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Roundtable method
A method of setting reserves by using the consensus of two or more claim personnel who have independently evaluated the claim file.
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Average value method
A method of setting claim reserves by using a predetermined dollar amount that is set aside for a particular type of claim when it is reported.
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Formula method
A method of setting claim reserves by using a mathematical formula.
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Expert system method
A method of setting reserves with a software application that estimates losses and loss adjustment expenses.
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Loss ratio method
A method of setting reserves by establishing aggregate reserves for all claims within a type of insurance or a class of loss exposures.
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Waiver
The intentional or voluntary relinquishment of a known right.
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Estoppel
A legal bar to asserting a certain contractual condition because of that party's previous actions or words to the contrary.
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Nonwaiver agreement
A signed agreement indicating that during the course of investigation, neither the insurer nor the insured waives rights under the policy.
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Reservation of rights letter
An insurer's letter that specifies coverage issues and informs the insured that the insurer is handling a claim with the understanding that the insurer may later deny coverage should the facts warrant it.
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Subrogation
An insurer's right to recover payment from a negligent third party who caused a property or liability loss that the insurer has paid to or on behalf of an insured.
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Alternative dispute resolution (ADR)
Methods for settling disputes outside the traditional court system.
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Mediation
An alternative dispute resolution method by which disputing parties use a neutral outside party to examine the issues and develop a mutually agreeable settlement.
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Arbitration
An alternative dispute resolution method by which the disputing parties use a neutral outside party to examine the issues and develop a settlement, which can be final and binding.
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Appraisal provision
A policy condition that provides appraisal as a mechanism for resolving disputes between insurers and insureds over the amount owed on a covered loss.
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Mini-trial
An alternative dispute resolution method by which a case undergoes an abbreviated version of a trial before a panel or an advisor who poses questions and offers opinions on the outcome of a trial, based on the evidence presented.
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Summary jury trial
An alternative dispute resolution method by which disputing parties participate in an abbreviated trial, presenting the evidence of a few witnesses to a panel of mock jurors who decide the case
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