[D001]
Daily report
A working copy of a policy, used as the agent's or the company's record.
[D002]
Damage from strikers insurance
A special commercial property insurance policy designed to provide coverage for employers for damage and loss caused by vandalism or sabotage of strikers.
[D100]
Damages
In liability insurance, refers to awards, which can be either compensatory or punitive. Compensatory consists of either general damages, which include pain and suffering, or special damages, which are out-of-pocket expenses. Punitive (or exemplary) are amounts that are awarded as a form of punishment or to act as an example.
[D119]
Dangerous instrumentality
(See instrumentality.)
[D003]
Data processing equipment insurance
Most often, an inland marine coverage form, for "all-risk" protection on equipment, software, extra expenses incurred as a result of the failure of such equipment caused by an insured loss, and loss of earnings. Also known as an "EDP" policy. May be extended to cover liability claims alleging errors and omissions by data processing companies. This coverage is known as data processors errors and omissions insurance.
(See data processors errors and omissions insurance and EDP insurance.)
[D004]
Data processors errors and omissions insurance
A special liability insurance policy designed to provide protection for insureds who offer data processing services to others. Coverage is for injury and damages resulting from negligent acts and errors or omissions in the rendering or failing to render of data processing service on the financial data or financial records of others.
(See data processing equipment insurance and EDP insurance.)
[D005]
Date of issue
Not to be confused with the policy effective date or the effective date of coverage, the date of issue is the date the policy was actually processed, typed, or issued by the insurer.
[D120]
Deadheading coverage
Auto coverage for the liability exposure of operating a tractor/trailer rig (truck) with an empty trailer
[D006]
Dean Schedule
A method (now obsolete) of rating fire insurance risks developed by A. F. Dean (Chicago, 1901). Geographically, much of the country was rated under this schedule which was known as the "Analytic System for the Measurement of Relative Fire Hazards." Dean described a standard unoccupied risk for which a base rate was named depending on overall territorial factors. Each individual hazard or factor (construction, area, damageability, occupancy, exposure, etc.) that appeared in the risk added or subtracted a percentage of the base rate to produce the specific rate. A successful, logical method which contributed much to insurance thinking and practice.
[D007]
Death benefit
The limit of insurance or the amount of benefit that will be paid in the event of the death of the covered person.
(See additional death benefit.)
[D090]
Death claim
When an insured dies, a death claim is made to the insurer. Prior to payment, if the policy is in its incontestable period, the claim may be investigated. Proof of death in the form of a death certificate is normally required.
[D008]
Debit
With respect to life insurance:
1) The amount of premium that is charged (or debited) against an agent for collection.
2) The book of business the premiums charged against an agent consist of.
3) In regard to the book of business charged to an agent, it may be the territory those insureds are located in.
4) In regard to the book of business charged to an agent, it may be the number of insureds assigned for premium collection.
With respect to commercial property and liability insurance: during the premium calculation process, debits refer to surcharges that may be assessed against an insured based on adverse individual risk characteristics or adverse loss experience, justifiable by verifiable facts. The factors qualifying for debit or surcharges are filed by the insurer and are approved by the various state jurisdictions.
[D009]
Debit agent
The person who collects industrial insurance premiums (usually for life insurance) weekly or monthly from policyholders by personal contact.
[D010]
Debit insurance
Insurance (usually life insurance) written in small amounts, the premium for which is payable in frequent installments (usually weekly or monthly) and collected by an agent known as a debit agent. The payment frequency and collection facilities were designed decades ago to accommodate workers at industrial factories who were paid weekly. Also called industrial insurance.
[D011]
Debris removal clause
A property insurance provision which provides coverage for the cost of cleanup and debris removal after a covered cause of loss has occurred, such as cleanup after a fire or windstorm.
Decennial insurance
A form of international coverage. Essentially, it insures against damage related to structural defects in design, plans and materials. Its name comes from the fact that the coverage stays in effect for up to a decade after a given building project is complete.
[D012]
Declaration or Declaration Page
1) With respect to property and liability insurance, the portion of the insurance policy itself, used to detail the name and address of the insured, the locations covered, the policy period, limits of insurance, endorsements attached and premiums for coverage. Commercial policies also contain such items as the type of entity and type of operation of the insured.
2) A statement made to the company or to its agents by a policyholder, upon which the company may rely in undertaking the insurance.
[D110]
Declaratory judgment
An opinion handed down by a court that determines a question that may be submitted by any party in a dispute. In insurance, declaratory judgments are typically requested on whether a loss qualifies for coverage or whether a policyholder should be provided with defense coverage.
[D013]
Decreasing term life insurance
A life insurance policy in which the death benefit starts out at the full stated amount but declines on a set scale throughout the life of the policy, reaching zero at the end of the policy term.
[D091]
Decrement
A pension plan that loses participants is said to be in decrement. Changes can occur from death, disability, retirement termination (plant closings, etc.). Loss of participants may affect the plan's continuity or desirability.
[D014]
Deductible
In a policy providing a deductible clause, the amount which must first be subtracted from the total damage incurred before determining the insurance company's liability. Of several types used, the straight deductible establishes the insurer's liability above the deductible but not below it; the franchise deductible establishes the insurer's liability for the entire amount of damage once the deductible amount is exceeded in a loss; and the disappearing deductible establishes the insurer's liability for an increasing proportion of the loss, as the total damage rises above the deductible, until the deductible finally "disappears." Then the insurer is liable for the entire amount. The deductible may be in the form of an amount of dollars, a percent of the loss, a percent of the value of the insured property, or a period of time, as in health insurance.
(See franchise clause.)
[D111]
Deemed
An agreement to treat a condition or circumstance in a given manner, regardless of any specific details.
[D016]
Defalcation
Embezzlement of money, as used in fidelity bonds.
[D017]
Defective product
There are three major areas of product defects:
1) defect occurring as a result of faulty manufacturing or assembly of the product
2) defective design
3) failure to give proper warning.
Even in products that are not inherently dangerous, the principle of strict liability is being applied more and more, whenever serious injury or damage occurs. Strict liability will always be applied in those cases where the manufacturing, installing, marketing, or selling of products with known defects have occurred.
[D121]
Defense Base Act Coverage
This item is an extension of the United States Longshore & Harborworkers Compensation Act. It applies to employees of American contractors and subcontractors involved in public works projects (including civilian support of overseas military bases, defense contracts and relief organization activity) located outside the continental U.S.
[D018]
Defense clause
A provision in commercial and personal liability insurance policies whereby the insurer has the right and duty to defend a lawsuit against the insured, even when those suits are considered false, groundless or fraudulent.
(See duty to defend.)
[D019]
Defense Research Institute, Inc. (DRI)
A nonprofit organization of defense lawyers engaged in personal injury litigation, formed principally to increase the skills of legal defense. Headquarters: Milwaukee, WI.
Defensive Driver Course
These are classes either offered through or approved by Departments of Motor Vehicles to enhance driving skills. These courses may make drivers eligible for discounts on their premiums. Courses taken for traffic school because of a moving violation are not eligible.
[D020]
Deferred annuity
A type of annuity where premiums are paid on an ongoing basis, but the benefit payments are deferred until a later date. The annuity can be scheduled to begin on a specific date or when a set age of the recipient is attained. A common example is an annuity that has been purchased for a child to pay for the child's college education. Payments are ongoing, and the payout may be scheduled to begin when the child turns 18.
[D092]
Deferred compensation plan
Employees may contract with their employers to defer compensation until some future date, i.e., retirement. Life insurance can be used to build cash for the deferred compensation (i.e., nonqualified deferred compensation plan). The death benefit can fully fund a plan at the premature death of the person for whom the compensation is being deferred.
[D021]
Deferred life insurance
Life insurance policies designed to pay a higher death benefit after a specified period to allow the benefits to become vested.
[D022]
Deferred premium
A premium payment method which allows an insured to pay premiums on an installment basis rather than the entire amount up front. Payments may be made monthly, quarterly or semiannually, but the payment amounts must be equal at least to the portion of the premium that has been earned.
[D023]
Deferred premium payment plan
Provides for the payment of premium in installments. An initial installment is due upon attachment of liability with additional installments payable at monthly, bimonthly or quarterly periods. The premiums due are usually in excess of the net premium earned on a short-rate basis.
[D024]
Deficit
When the total amount outgoing owed exceeds the amount incoming owned in any given accounting period, or when debits exceed credits.
[D024a]
Defined benefit plan
A basic form of pension plan which requires contributions from both an employer and employee. In this plan, the amount of the benefit is known while the amount of the contributions needed to fund the plan varies.
[D024b]
Defined contribution plan
A basic form of pension plan that requires contributions from both an employer and employee. In this plan, the amount of the benefit varies according to factors such as the plan participant's income, contribution amount, years until retirement, age, etc., while the amount of the contributions funding the plan is fixed.
[D025]
Delay clause
1) In ocean marine insurance, a clause in the policy that excludes coverage for any loss experienced by the insured that results in damage to goods or loss of income/market that results from the vessels not arriving at its destination as scheduled (delayed).
2) In life insurance, a clause in the policy that allows the insurer to delay a loan on the cash surrender value of the policy, for a time period of normally six months, as clarified in the policy. The reasons and conditions allowing this delay are set forth in the contract; however, the purpose of this clause is to protect an insurer from excess demands by insureds for loans during periods of economic disasters or catastrophes.
[D026]
Delayed payment clause
A life insurance clause which allows an insurer to defer the payment of the policy benefits to a beneficiary for a specified period of time after the death of the insured under certain conditions. This normally occurs when the insured and the primary beneficiary are both subjected to a common disaster, or in the case of other natural disaster. One example would be when a husband and wife are involved in the same airplane accident which kills the husband and leaves the wife in critical condition. The payment of the proceeds can be delayed and, if necessary, paid to the contingent beneficiary or the estate of the primary, in the event the primary beneficiary does not survive. Many life insurance policies clarify that a primary beneficiary must survive a stated period of time after the death of the insured in order to collect the benefits.
[D027]
Delivery receipt
The acknowledgment by the insured of receipt of the policy, sometimes requested by the agent or insurer in writing, similar to a postal receipt.
[D028]
Demolition insurance
Insurance against the cost of removing the ruins of a building partially destroyed by an insured peril, when required by some city ordinances.
Demurrage
Refers to a vessel owner’s loss of use when that loss is caused by either damage to the vessel or due to delays in loading or unloading while in port.
[D093]
Demutualization
The process where an insurance company owned by its policyholders (a mutual company) converts its charter to that of a company owned by shareholders (a stock company). The process may involve returning to the policyholders shares of stock or other value for their loss of ownership interest (membership rights) in the mutual company prior to the company conversion to a stock company. The process is regulated by the state where the demutualizing company is domiciled. More and more states are permitting a hybrid approach (mutual holding company) that combines both mutual policyholder ownership and marketable stock.
(See mutual holding company.)
[D029]
Dental insurance
Health insurance coverage for specified dental services, most often provided on a group basis.
[D030]
Dentists professional liability insurance
Insurance designed to cover the professional liability exposures of dentists that result from claims for bodily injury and/or personal injury which may occur from alleged malpractice, errors or omissions in the rendering or failing to render professional services.
[D094]
Dependent life insurance
Optional and voluntary life insurance benefits on dependents and spouse of a member in a group insurance contract. Limits of coverage are generally lower than on the life of the dependent and the dependent may be responsible for all or a portion of the premium payments on dependent life insurance.
[D112]
Dependent property
Protects against income that is lost because of critical reliance on another property that has been damaged or destroyed (i.e., a key customer, supplier or processing partner).
[D031]
Deposit administration plan
A group annuity plan, often to administer pensions, in which the members of the plan (or their employers) make scheduled deposits or payments to the plan. These payments go into a single group fund which may be invested. When each member reaches an agreed upon date, such as retirement, annuities are purchased by the plan, for that individual member for the benefit and payment of that member.
[D032]
Deposit premium
A tentative charge made at the beginning of certain policies and reinsurance agreements, to be adjusted when the actual earned charge has been later determined. Also known as initial premium.
[D095]
Deposit term insurance
A term insurance policy that, in the earlier years, has a higher premium than it does in the later years. In the beginning, the excess premium is considered savings, and this extra amount of money is set aside to earn interest. Later these dollars (interest plus the lump sum or deposit) will be used to reduce the premium payment. The entire deposit will be consumed in premium payments.
[D033]
Depositors forgery bond
A bond where a person or corporation can insure against losses from forgery or alteration of outgoing negotiable instruments only, i.e., instruments drawn against the insured's account.
[D034]
Depository bond
Bonds specifically developed for use by financial institutions to guarantee the safety of funds made by depositors and their availability for withdrawal as indicated in the terms of deposit. It should be noted that this is not a federal deposit guarantee.
[D035]
Depreciation
The reduction in value of tangible property caused by physical deterioration or obsolescence.
(See appreciation.)
[D036]
Depreciation insurance
Insurance which pays the difference between the depreciated value of property at the time it is damaged or destroyed by a covered cause of loss insured against, and the cost of replacing it with new property of similar kind and quality. Fast becoming obsolete and now provided for in replacement cost coverage of most personal and commercial property insurance policies.
[D122]
Derivative
(See insurance derivative.)
[D037]
Detached structures
Structures located on the same premises, but not physically attached to each other.
[D101]
Detention
Arrest or detention which involves the illegal restraint of an individual’s liberty; it is considered to be a type of personal injury.
Developed to net premiums earned
A financial ratio that compares an insurers premiums that have developed through a given year to its net earned premiums. The ration is a measure of whether a company's loss reserves match its premium growth.
Development to policyholder surplus
A financial ratio that measures an insurer's reserve status (deficiency or redundancy) with regard to its policyholder surplus.
[D038]
Deviation
1) A rate filing which departs from the filing made by a rating bureau. Under all-industry prior approval rating laws (and some earlier laws), insurers who were members of and subscribers to rating bureaus (for the class of insurance involved) were required to use the rate filed by the bureau, unless the insurers deviated by making a filing with an insurance department and relating their variation to the bureau filing. Deviated filings should be distinguished from independent filings where an insurer withdraws from its affiliation with the bureau for the area of the filing and files directly with the insurance department separate and apart from the bureau filing. Deviations are no longer necessary in over half the states with open competition type rating laws, under which an insurer has no legal obligation to adhere to the filing and may make independent filings while remaining a member or subscriber.
2) In marine insurance, the route taken by a vessel going to some other port or taking some course other than that described in the policy of marine insurance, contract of carriage, or bill of lading.
[D039]
D.H.--double hydrant
On a fire insurance diagram, this designates a double hydrant for the attachment of fire hose.
[D040]
Diagnostic Related Group (DRG)
A DRG is the medical claims reimbursement system, developed by Medicare for hospitals, where predetermined payment amounts have been set for listed procedures. The DRG systems have also been used by some employers and insurers as a cost commitment technique with health care providers.
[D041]
DIC--difference in conditions insurance
1. A property policy insuring "all risks" of physical loss or damage, excluding fire and extended coverage perils. This would include any cause of loss that would result in the property being left in a condition different from what it was prior to the occurrence of the loss event, except for those causes of loss specifically excluded. Such unnamed losses would include collapse, water damage, theft and (optionally) flood and earthquake. Often, this coverage is provided on an inland marine basis. 2. A term used to describe liability coverage needed by wrap-up program enrollees to protect them when either the wrap-up ends or the wrap-up aggregate limit is exhausted.
[D042]
Difference in conditions insurance (DIC)
A property policy insuring "all risks" of physical loss or damage, excluding fire and extended coverage perils. Any cause of loss that would result in the property being left in a condition different from what it was prior to the occurrence of the loss event, except for those causes of loss specifically excluded. Such unnamed losses would include collapse, water damage, theft and (optionally) flood and earthquake. Often, this coverage is provided on an inland marine basis.
[D102]
Diminished value
Refers to either a real or perceived reduction in market value to a vehicle that has been damaged in an accident and then repaired.
[D113]
Direct action statute
Any law that permits a third party to sue an insurer or a reinsurer directly (instead of suing, respectively, an insured or a ceding insurance company).
[D043]
Direct billing
A system for the collection of premiums where the insurance company sends a notice to the insured for the premium in lieu of the conventional collection of premiums by the agent. The company sends a statement to the agent, usually monthly recording the premiums collected direct, and credits the agent with commission due on those items.
[D044]
Direct damage
Causes of loss that produce direct and straightforward property damage (without interruption in time or deviation in space) from the cause of the event to the damaged property.
[D045]
Direct loss
Causes of loss that produce direct and straightforward property damage (without interruption in time or deviation in space) from the cause of the event to the damaged property.
[D114]
Direct response system
An insurance sales system in which the insurer offers insurance directly to the public, using only its own employees and forgoing the use of agents. Common methods are the use of the U.S. mail, the telephone, or the Internet.
[D046]
Direct selling system
An insurance sales system in which the insurer offers insurance directly to the public, using only its own employees and forgoing the use of agents. Common methods are the use of the U.S. mail, the telephone, or the Internet.
[D047]
Direct writer
A company that sells insurance to the public either through employees licensed as agents or through licensed agents, compensated on a commission basis, who represent only one company; but not through independent agents representing more than one company.
(See American agency system and independent agent.)
[D048]
Direct written premium
The policy premium, adjusted by additional or return premiums, but excluding any reinsurance premiums.
[D049]
Director of insurance
The official of a state charged with the duty of enforcing its insurance laws. Also called the superintendent of insurance and commissioner of insurance. The official is elected in 11 states, appointed by a governor or state agency in 38 states, and is a civil service appointee in Colorado.
[D050]
Directors and officers liability insurance
Protects officers and directors of a corporation against damages from claims resulting from negligent or wrongful acts in the course of their duties. Also covers the corporation (and even the officers and directors in some cases) for expenses incurred in defending lawsuits arising from alleged wrongful acts of officers or directors. These policies always require the insured to retain part of the risk uninsured.
[D051]
Disability
Inability to work due to personal injury or illness. Each policy may contain its own modified definition.
[D096]
Disability benefits
The benefits paid for one who becomes disabled. Normally these benefits are periodic, i.e., weekly or monthly. Occasionally benefits may be in the form of a lump sum. The qualification for benefit payout is determined by the definition of disability.
[D097]
Disability buy-out insurance
If a partner or officer/shareholder of a business becomes permanently disabled, the other owners may want to buy out that partner's or shareholder's interest in the business. A contract is formed between the owners and funded by a disability policy that will pay if one of the owners becomes permanently disabled for more than six months, one year, two years, etc. The payment is usually in the form of one lump sum or a series of large payments.
[D052]
Disability income insurance
A form of coverage which provides benefits to employees disabled by sickness or accident not related to employment. An extension of workers compensation acts in New York, New Jersey, California, Hawaii, Puerto Rico and Rhode Island.
(See accident and sickness insurance.)
[D052a]
Disability insurance
A form of health insurance coverage which provides benefits in the form of income (usually weekly or monthly) to employees disabled by sickness or accident not related to employment. An extension of workers compensation acts in New York, New Jersey, California, Hawaii, Puerto Rico and Rhode Island.
(See accident and sickness insurance.)
[D053]
Disappearing deductible
A disappearing deductible is a dollar amount deducted from the amount of loss which is reduced as the size of losses increase, finally disappearing entirely (for a "large" loss) to provide full coverage when a loss reaches a certain specified figure. Deductible amounts vary from $500 to $5,000, and the limit at which the deductible disappears is usually between $5,000 and $25,000. Disappearing deductible plans are principally associated with fire policies, which thus qualify for reduced rates.
[D054]
Disappearing deficit
Elimination of a deficit (loss) year (should one occur) from the computation of contingent commission in exchange for an annual charge in the contingent commission statement, such charge being a percentage of earned premiums.
[D103]
Disaster
Any event that creates an inability on an organization’s part to provide critical business functions for some predetermined period of time.
[D104]
Disaster prevention
Any course of action that identifies, mitigates or prevents occurrences that could result in a substantial disruption of business operations.
[D105]
Disaster prevention checklist
A list of questions for evaluating disaster prevention measures that are in place in an organization’s critical areas of operation.
[D106]
Disaster recovery
Refers to an organization’s ability to restore critical functions and to resume operations after activity is disrupted by a disaster.
[D107]
Disaster recovery plan
A plan that documents the steps necessary for an organization to begin recovery from operations that are being disrupted by a disaster. The plan should include specific objectives, such as finding a replacement site within 48 hours, contacting alternate suppliers, etc.
[D107a]
Disbursements
Prior to the sailing of a vessel, it is necessary to spend money for supplies, labor and other things which will be totally lost if the vessel does not complete its voyage. Insurance on "disbursements" reimburses the owner for these expenses in case the ship becomes a total loss before reaching its destination.
[D056]
Disclaimer
1) The denial of liability or an obligation.
2) The denial of a claim or coverage based on just grounds.
[D057]
Discounted premium
An insurance premium that has received a discount or credit because it was paid in full in advance of the due date.
[D058]
Discovery period
A period of time after cancellation of an insurance contract or bond during which the insured can discover whether there would have ben a recoverable loss if the contract had remained in force. The period varies considerably and, in the case of certain bonds, could be indefinite by statutory requirements.
[D059]
Discrimination
The exercise of choices in selecting risks, as an essential function of any insurance system, when used in matching individual risks with the rates representing their chances of loss or their expenses. Often used erroneously to imply unfair discrimination, which is illegal.
(See classification, selection, and unfair discrimination.)
Dishonesty, disappearance and destruction policy
A now obsolete crime insurance policy that provided a combination of fidelity coverages with other crime coverages. It was previously called the 3-D policy. This policy has been replaced by more inclusive commercial crime coverage forms.
[D107]
Disinterested party
Refers to any individual who does not have a reason for a dispute to be resolved in any particular manner. A party who has nothing to gain from how an argument is decided is valuable as a party to help resolve a dispute, such as an arbitrator or mediator.
[D061]
Dismemberment
Loss of, and sometimes loss of use of, specified members of the body.
[D062]
Dismemberment benefit
In accident and health insurance coverages, the schedule of benefits that will be paid should dismemberment occur. The schedule includes the amount of payment for each of the various types of dismemberment.
[D063]
Distribution clause
A provision in a property insurance policy stating that the coverage is "blanket," in other words, one amount covering several items shall be limited on each item to the proportionate amount which the value of the particular item bears to the total value of all the insured items.
(See average clause.)
[D064]
Diversification
The practice insurance companies employ to spread their risks geographically by type of insured and by peril in order to minimize the catastrophe potential.
[D065]
Dividend
An amount of money paid to the policyholders of a mutual insurer because of their ownership interest. A stock corporation may also pay a dividend to its policyholders if it writes participating insurance. In either event, the amount is payable on the basis of certain savings in losses or expenses realized by the insurer on that participating class of business.
(See participating insurance.)
[D066]
Dividend accumulation
An option in some life insurance policies which allows the insured to choose to leave the dividends earned by the policy with the insurer, in order to accumulate interest income for the insured.
[D067]
Dividend option
In some life insurance policies, insureds may select from specified options for the method best suited to that insured, with respect to the handling of the dividends earned by the policy. Some of the most common options available are reduced premiums on continuing coverage, payment to the policyholder in cash, the ability to purchase paid-up additions of whole life insurance, to leave the dividends on deposit to accumulate at compound interest, or to apply the dividends to the purchase of extended term insurance.
[D068]
Division wall
A wall which effectively separates a building into two separate fire areas. Must meet certain standards to qualify in the making of fire insurance rates.
(See fire wall.)
[D123]
Dockominiums
Trendy reference to a situation in which vessels are owned individually (similar to a condominium unit owner), but the applicable docks and piers are under association ownership.
[D098]
Doctrine of reasonable expectations
A term courts use to interpret policy language. A court may chose to rule that coverage applies if a reasonable person would assume, by the nature of the policy, that a particular circumstance should be covered.
[D069]
Domestic company
An insurance company incorporated or organized under state law is a domestic insurer in that particular state.
(See alien company and foreign company.)
[D115]
Domestic partners
Two adults of the same or opposite sex sharing a household and involved in a spousal relationship.
[D070]
Domestic preference
The practice of some state governments to impose more favorable tax rates for domestic insurers than foreign or alien insurers.
[D116]
Domestic terrorism
Describes an intentional act to cause serious property damage or bodily injury for political purpose that is perpetrated by a country's citizen against persons or property in that same country.
[D071]
Domiciliary state or state of domicile
The state in which an insurer is incorporated. In the case of an insurer incorporated in a foreign country, the state which such insurer "desiring to be an authorized insurer in the U.S." has designated as its state of entry.
[D072]
Door-to-door coverage
An inland marine and ocean marine insurance that covers goods or cargo shipped for the entire time of transport from the premises of the manufacturer to its final destination.
[D073]
Double indemnity
Twice the life insurance benefit, payable if death is caused by accident. Multiple indemnity is often available beyond that of double indemnity for death due to certain accidents.
(See accidental death benefit and additional death benefit.)
Double trigger contract
Any contractual situation that requires two independent events or conditions to be satisfied in order to initiate (trigger) an obligation. Such agreements are increasingly used in complex reinsurance or alternative risk transfer arrangements.
[D117]
Downgrade clause
A contract provision used by ceding insurers asking reinsurers, as part of their treaty agreement, to make adjustments to strengthen their balance sheet if a financial rating service lowers their financial rating.
[D074]
Draft
A substitute for a check, used by many insurance companies to pay claims. A draft is payable through a named bank, which collects the amount of the draft from the issuing insurance company and then gives credit to the claimant payee's local bank.
[D075]
Dram shop laws
The laws will vary by state, but for the most part, the owner or operator of an establishment serving or providing alcoholic beverages is liable for injury or damages caused by or to an intoxicated customer, if it can be established that the owner or operator caused or contributed to the intoxication of the person through the sale of alcoholic beverages. These laws are sometimes called liquor liability laws.
(See liquor liability laws.)
[D076]
Dram shop liability insurance
A form of liquor liability coverage in which the basis for legal liability is a dram shop, liquor control, or alcoholic beverage law. The laws vary, but most provide that the owner of an establishment that serves alcoholic beverages is liable for injury or damage caused by an intoxicated person if it can be established that the liquor licensee caused or contributed to the intoxication of the person.
(See liquor liability laws.)
[D099]
cDread disease policy
Often called a cancer policy because it covers only one or more dread diseases: cancer, heart disease or other major malady.
(See also cancer policy.)
[D077]
DRG--Diagnostic Related Group
A DRG is the medical claims reimbursement system, developed by Medicare for hospitals, where predetermined payment amounts have been set for listed procedures. The DRG systems have also been used by some employers and insurers as a cost commitment technique with health care providers.
[D078]
DRI--Defense Research Institute, Inc.
A nonprofit organization of defense lawyers engaged in personal injury litigation, formed principally to increase the skills of legal defense. Headquarters: Milwaukee, WI.
[D079]
Drive to and from work
A personal lines auto insurance rating category. It is used to classify vehicle usage with respect to the distance driven by the principal operator when traveling to or from the workplace. Traditional categories have been: under 3 miles to work one way; 3 to 15 miles to work one way; over 15 miles to work one way.
[D124]
Drive-by claims
An informal reference to Americans With Disabilities Act (ADA) compliance lawsuits that are filed by disabled persons and lawyers against, typically, small businessowners. Usually such suits are typically filed without contact or notice to the plaintiffs. They are nuisance actions intended to force settlement or to collect attorney fees rather than to influence ADA compliance.
[D080]
Drive-in claims service
A system employed by some automobile insurers where vehicles with minor insured damage can be driven to the company's local "drive-in" claims office for inspection and immediate settlement of the damage claim.
[D081]
Drive-other-car coverage
A provision in an automobile policy designed to protect the policyholder (and insureds other than the policyholder) when driving cars other than the one described in the policy.
[D082]
Driver training credit
To encourage driver education courses at schools and colleges, many insurers grant lower rates to applicants for private passenger automobile insurance who have successfully completed an approved training program.
[D118]
Drop down coverage
Refers either to an excess or reinsurance policy that extends its coverage to provide protection on either a primary or a lower layer basis. The coverage may exist as a result of the applicable policy language or by written agreement.
[D083]
Dry valve
A device in automatic sprinklers which uses air pressure to prevent water from entering the pipes in a sprinkler system until released by the opening of a sprinkler head. The purpose of such a dry valve is to prevent freezing of water-filled pipes and consequent bursting.
[D084]
Dual coverage
An insurance term with respect to claims handling, used to indicate that more than one policy or coverage form may be available to respond to payment of a claim or loss.
[D085]
Dual valuation clause
An ocean marine policy provision that applies to the hulls of older vessels. The clause values a vessel differently for total and partial losses. In the case of a total loss, the settlement amount will reflect the age and condition of the vessel. For partial losses, settlement amounts will reflect the added cost of repair and refurbishing to make a damaged vessel seaworthy. Another purpose of this type of valuation clause is to discourage incidents of intentional total losses.
[D086]
Duty to defend
A provision in commercial and personal liability insurance policies where the insurer has the right and duty to defend lawsuits against the insured, even when those suits are considered false, groundless or fraudulent.
(See defense clause.)
[D087]
Duty to warn
The legal responsibility or duty of manufacturers, retailers, or wholesalers to warn purchasers of any known or potentially dangerous condition, use or misuse of the product that could result in injury or damage.
Developed to net premiums earned
A financial ratio that compares an insurers premiums that have developed through a given year to its net earned premiums. The ration is a measure of whether a company's loss reserves match its premium growth.
[D107]
DV (Diminished Value)
Refers to either a real or perceived reduction in market value to a vehicle that has been damaged in an accident and then repaired.
[D088]
Dwelling
A house in which people live as distinguished from a store, a factory or any other building.
[D089]
Dwelling policy or dwelling fire policy
A property policy available for owners of dwellings. Usually used for those dwelling risks that are not eligible for the homeowners package policies. There are three groupings of covered causes of loss available. Form 1 provides protection for basic causes of loss. Form 2 provides broad and Form 3 provides special perils coverage. Personal liability protection may be available as an endorsement to the dwelling policy but is not automatic.
