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Glossary
R - S
- Recision
- The cancellation
of an insurance policy back to its effective date resulting in a
return of all premium charged.
- Regulations
- Requirements
developed by the CDI that implement laws passed by the
California legislature. Regulations go through a public comment
process and must be approved by the state Office of
Administrative Law.
- Reinstatement
- The restoration
of a lapsed or canceled policy.
- Renewal
- The continuation
of an insurance policy (offer or renewal) into a new term from
the same insurance company that issued the existing policy.
- Replacement Cost
- The amount that
it costs to replace lost or damaged property with new property
of like kind or quality in the local market.
- Schedule Rating
- A method of
pricing property and liability insurance. Schedule Rating uses
debits and credits to modify a base rate figured by the special
characteristics of the risk exposure. Insurers develop Schedule
Rating because actuarial experience shows a direct relationship
between certain physical characteristics and the possibility of
loss. Most schedule rating plans must be filed and approved by
the CDI.
- Second Party
- The insurance
company in an insurance contract.
- Self-Insured Retention
(SIR)
- The portion of a
property or liability loss retained by a policyholder.
- Severity
- The size of a
loss. Loss severity is used as a factor in establishing premium
rates.
- Short Rate Cancellation
- A cancellation
initiated by policyholder request in which the premium returned
is subject to an administrative penalty.
- Sistership Liability
- Exists when a
manufacturer refuses to withdraw a product as ordered by a
government agency or company management. Once a defective
product has been identified and recalled, an insurance company
excludes all other claims arising from the defective product due
to the negligent failure of the company to take the product off
the market.
- Split Limits
- The technique
for expressing limits of liability coverage under a particular
insurance policy by stating separate limits for different types
of claims growing out of a single event or combination of
events. Coverage can be split (limited) per person, per
occurrence, between bodily and property damage, or in other
ways.
- Subrogation
- The process of
recovering the amount of claim damages paid out to a
policyholder from the legally liable party. When a company
pursues the legally liable third party, they are required to
include the policyholder's deductible in the recovery process.
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