Law Exam 2 Vocab

ACORD

Association for Cooperative Operations Research and Development. Standard insurance forms used across the industry to provide standardized documentation.

Additional Insured

An individual/organization added to an existing insurance policy owned by another, granting them coverage and rights under that policy for specific risks or liabilities.

Aggregate Limit

The total maximum amount of money an insurance company will pay out for all covered losses and claims during a specific policy period (usually 12 months), regardless of the number of individual claims.

Arbitration

An out-of-court dispute resolution process where an impartial/neutral third party (an arbitrator) reviews the evidence and makes a binding decision to resolve the dispute.

Automatic stay

A formal court order that automatically goes into effect upon filing for bankruptcy, temporarily stopping all collection efforts, lawsuits, and enforcement actions against the debtor.

Bankruptcy protection

Legal safeguards provided to an individual or business under federal bankruptcy law that protects them from creditors while restructuring finances or liquidating assets.

Builders Risk Insurance

Specialized property insurance that covers physical structures (buildings), materials, and equipment while under construction or renovation against direct damage or loss.

Certificate of Insurance

A formal document issued by an insurer or agent verifying the existence of an active insurance policy, it includes coverage types, limits of the insurance, and policy dates.

"Claim, Cost, Demand, Liability and / or causes of action" and "claims made" policy

An all inclusive legal phrase that covers every stage of financial and legal obligations. An insurnace plan that protects you based on when the paperwork is submitted during the active policy term regardless of when the event happened.

Commercial General Liability Insurance (CGL)

An insurnace policy protecting businesses from third-party financial claims for bodily injury, property damage, and personal injury.

Completed Operations Coverage

Insurance protection that covers property damage or bodily injury occurring after a project is finished and handed over to the owner.

Contractual Liability Exclusion

Language in a liability policy that removes coverage for liabilities you take on by signing the contract, these go beyond what the law would have made you responsible for.

Cost of Defense

Legal expenses, attorney fees, and associated court costs acquired when defending a policyholder against a lawsuit or legal claim.

Covered Party

An individual entitled to protection, benefits, or defense under the terms of an insurance policy.

Coverage

The specific scope of protection, risks, and benefits provided to an insured party under an insurance policy.

Declarations page

The summary sheet at the front of an insurance policy covering the policyholder, covered risks, policy limits, deductibles, effective dates, and premium amounts.

Deductible

The specific out-of-pocket amount the policyholder must pay before the insurance company pays its portion of a covered claim.

Diminution in value

The reduction in market value of real property or asset following damage and repair.

Dram Shop Liability

Legal responsibility placed on commercial alcohol vendors that hold them responsible for harm or damage caused by visibly intoxicated patrons.

Duty to Defend

An insurer's legal obligation to provide and fund legal defense for a policyholder against claims or lawsuits that fall within their policy coverage.

Endorsement

A written amendment added to an insurance policy that modifies, expands, or restricts original coverage terms.

Errors and Omissions policy (E&O)

Liability insurance protecting contractors, architects, and engineers against claims resulting from professional mistakes, design defects, or negligence.

Exclusions

Specific conditions, events, types of damages, or circumstances explicitly listed in an insurance policy that are not covered.

Fiduciary Duty

A legal obligation to act soley in the best interests of another.

Foreseeability

The legal principle assessing whether a reasonable person could anticipate the potential harm or consequences resulting from an action.

Fortuitous loss

An accidental, unexpected, and unintentional financial loss resulting from uncontrollable events.

Indemnify / Indemnity / Indemnitor / Indemnitee

A contractual risk-shifting arrangement where one party (indemnitor) promises to compensate and hold harmless another party (indemnitee) against specified losses or damages.

Insurance

A legal contract that protects you from unexpected financial loss. An insured pays premiums to an insurer (insurnace company) in exchange for financial protection against covered losses.

Liquidated damages

A predetermined amount of money that a breaching party pays for specific delays or failures, serving as an estimate of anticipated damages.

Litigation

The process of taking a dispute or legal claim through the court system to obtain a resolution.

Mediation

An informal, non-binding dispute resolution process facilitated by a neutral third party to help disputing parties reach a mutual agreement.

Mobile equipment

Heavy construction vehicles and machinery (excavators or cranes) designed primarily for off-road construction site operations.

Occurrence and Occurrence Policy

An incident or accident resulting in loss, and an insurance policy covering claims arising from events that happened during the policy period regardless of when filed.

Personal and Advertising Injury

Insurance coverage for non-physical harms such as libel, slander, false arrest, copyright infringement, or invasion of privacy in business operations.

Policy limit

The maximum payout amount an insurer is obligated to pay under an insurance policy for a single claim or over a policy period.

Primary Insurance

The main insurance policy that responds first to a covered loss or claim.

Preferential transfer

A payment or transfer of property made by an debtor to a creditor shortly before filing bankruptcy. This gives the debtor an unfair advantage over others.

Property damage

Physical injury to, destruction of, or loss of use of real or personal property.

Proof of Insurance

Documentation (such as a certificate of insurance) confirming active insurance coverage and limits.

Punitive Damages

Monetary damages awarded by a court to punish egregious, malicious, or grossly negligent conduct.

Reservation of Rights

A declaration by an insurer that it will defend a claim while reserving the right to deny coverage later if facts reveal the claim is excluded from their policy.

Satisfaction clause

A clause requiring one party’s work or product to meet a specified standard/approval of the other party before payment is required.

Self Insured Retention (SIR)

A specified dollar amount that the insured must pay out-of-pocket for damages or defense costs before insurance coverage begins.

Subrogation

The legal right of an insurance company to recover the money they paid for a claim from the third party responsible for causing the loss.

Surety

A third party agreement that guarantees that a person/company will fulfill their contractual obligations (sometimes through a bond).

Tort

A civil wrong (other than a breach of contract) causing harm or loss, resulting in legal liability.

Trigger (insurance context)

The specific event or condition (such as injury or claim submission) required to activate coverage under an insurance policy.

Umbrella coverage

Secondary liability coverage providing higher policy limits beyond the primary insurance policies.

Waive and Waiver of Subrogation

The voluntary relinquishment of a right, or an insurance policy provision preventing an insurer from seeking recovery/suing a third paty to recover their funds.

Workers Compensation Insurance and Employer's Liability Insurance

Insurance covering medical benefits and lost wages for employees injured on the job, alongside liability protection against work-related lawsuits.