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Abandonment: As used in property insurance, prohibits the insured from abandoning damaged property to the insurance company for repair or disposal
Accounts Receivable Coverage: Covers loss of sums owed to the insured by its customers that are uncollectible due to damage by an insured peril to accounts receivable records
Actual Cash Value (ACV): Cost to repair or replace damaged property with materials of like kind and quality, less depreciation
Additional Insured: A person or organization for whom insured status is arranged by endorsement
Advertising Injury: General liability coverage that insures against libel, slander, invasion of privacy, copyright infringement and misappropriation of advertising in connection with the insured's advertising of its goods or services
Aggregate: The maximum amount an insurance company will pay during the policy
All Risk Coverage: Property insurance covering loss arising from all causes of loss except those that are specifically excluded
Application: A form with the information needed for an insurance company to underwrite and rate a specific policy
Audit: A verification of the financial records, usually payroll or receipts, of an organization to determine exposures and premiums
Automobile: A land motor vehicle, trailer or semi-trailer designed for travel on public roads, not including 'mobile equipment'

Bailee Coverage: Coverage on property left in the care of the insured for storage, repair or servicing
Basic Cause of Loss Form: Property coverage for named perils: Fire, Lightening, Explosion, Smoke, Windstorm, Hail, Riot, Civil Commotion, Aircraft, Vehicles, Vandalism, Sprinkler Leakage, Sinkhold Collapse and Volcanic Action
Basic Limits: The minimum limits of liability that can be carried by an insured
Best's Rating: A rating system by A.M. Best Company giving the financial condition of insurance companies
Binder: A legal agreement issued on behalf of insurance companies to provide temporary evidence of insurance until a policy can be issued
Bodily Injury by Accident Limit (Workers' Compensa: The most an insurer will pay under Part Two of a Workers' Compensation Policy for claims arising out of any one accident, regardless of how many employee claims arise out of the accident
Bodily Injury by Disease, Each Employee (Workers' : The most an insurer will pay under Part Two of a Workers' Compensation Policy for damages due to bodily injury by disease to any one employee
Bodily Injury by Disease-Policy Limit (Workers' Co: The most an insurer will pay under Part Two of a Workers' Compensation Policy employee bodily injury by disease claims during the policy period regardless of the number of employees who make such claims
Bodily Injury Liability Limit: The insured is legally liable for damages due to bodily injury, sickness, or disease, including resulting death
Boiler & Machinery Insurance: Coverage for loss caused by mechanical or electrical equipment breakdown, including damage to the equipment
Bond: A written agreement in which one party, the surety, guarantees the performance or honesty of a second party, the principal (obligor), to the third party (obligee) to whom the performance or debt is owed
Brands and Labels Endorsement: Property insurance coverage that allows the insured to remove labels from damaged goods or mark the items as 'salvage,' provided the goods are not damaged in the process
Broad Causes of Loss Form: Property coverage for the named perils: Fire, Lightening, Explosion, Smoke, Windstorm, Hail, Riot, Civil Commotion, Aircraft, Vehicles, Vandalism, Sprinkler Leakage, Sinkhole Collapse, Volcanic Action, Breakage of Building Glass, Falling Objects, Weight of Snow, Ice or Sleet, Water Damage (in the form of leakage from appliances) and Collapse from Specified Causes
Building Ordinance Coverage: Covers against loss caused by enforcement or ordinances or laws regulating construction and repair of damaged buildings
Burglary: Theft of property by forcible entry, which is evidenced by visible signs, in a premises, by a person
Business Auto Policy: Auto Policy for businesses that includes auto liability and auto physical damage coverages
Business Income Coverage: Insurance covering loss of income by a business when operations are interrupted due to property loss that is a covered cause of loss
Business Interruption Coverage: See Business Income Coverage
Business Owners Policy (BOP): A policy that combines property and liability coverages for special types of small businesses

Cancellation: The termination of an insurance policy usually before its expiration
Care, Custody or Control: An exclusion of liability insurance which eliminates coverage for damage to property in the insured's care, custody or control
Carrier: The insurance company which provides coverage
Casualty Insurance: Insurance that covers loss caused by injuries to persons and the legal liability imposed on the insured for injury or for damage to property of others
Catastrophe: A severe loss causing sizable financial loss
Causes of Loss Forms: The commercial property forms that define the covered causes of loss for which coverage is provided. Commonly, there are 3 Cause of Loss Forms: Basic, Broad and Special
Certificate of Insurance: A document providing evidence that insurance has been purchased
Claim: A request by a policyholder or a claimant for payment under a policy of insurance
Claim Expense: Expenses of settling or investigating a claim
Claimant: The person presenting a claim
Claims Reserve: An amount of money set aside to meet claims reported but not paid
Class: A group of businesses who have common or similar exposures and are grouped together for rating purposes
Classification: The arranging or establishing of business groups or categories for rating purposes
Coinsurance Provision: An insurance provision for property coverages in which the policyholder must carry an amount of insurance that is at least equal to a set percentage of the value of the property in order to receive full payment of a loss
Collapse: Collapse of a building and collapse of personal property within a building due to specified causes (such as weight of snow, ice or rain). Does not include collapse due to design error or due to faulty workmanship or materials if the collapse occurs after construction is complete
Collision Insurance: Provides for payment to a covered automobile resulting from the striking of another object by a moving vehicle
Commercial General Liability Policy (CGL): A coverage which protects business organizations against liability claims for bodily injury and property damage. Those claims may be the result of events at your place of business, from your business operations, the products or services you make or do, communications or advertisements your business broadcasts
Competitive State Funds: State-owned and operated facilities that write Workers' Compensation Insurance solely for that state
Completed Operations: A General Liability coverage for the work of the insured that has been completed away from the business premises
Comprehensive Auto Coverage: Covers an automobile for loss or damage for all causes except for those specifically excluded
Compulsory Insurance: Insurance that is required by law
Concealment: Failure to disclose facts which may void an insurance policy
Conditions: Things agreed upon in an insurance policy that state the rights and the requirements of the insured and the insurer
Consequential Loss: An indirect loss such as the reduction in value of property that is the result of a direct damage loss
Constructive Total Loss: Term used when damage to property is more than the value of the property
Contract: An agreement between two or more parties with characteristics of mutual assent, competent parties, a valid consideration and legal subject
Countersignature: The signature of a licensed agent or representative on a policy that is required to validate the policy
Cumulative Injury: A type of injury which occurs from the repetition of tasks over an extended length of time

Data Processing or EDP Coverage: All risk property insurance for electronic data processing equipment (computers), computer programs and data including mechanical breakdown, electrical injury and changes in temperature and humidity
Debris Removal: The cost of removal of debris from covered property damaged by an insured peril
Deductible: The amount of loss which is paid or absorbed by the insured prior to determining the insurance company's liability
Deposit Premium: The amount of premium required at the beginning of a policy prior to the actual premium being determined
Depreciation: The reduction in value of property over a period of time. Usually as a result of age, wear and tear, or economic obsolescence
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
Driver Other Car Endorsement: An endorsement that can be added to an automobile policy that gives protection while the insured designated in the endorsement is driving a car other than the one named in the policy
Drop Down Provision: A clause used in Umbrella policies providing that the Umbrella will 'drop-down' over underlying policy aggregate limits when they have been reduced or exhausted

Earned Premium: The amount of premium that has been used for certain periods of time
Earth Movement or Earthquake Exclusion: An exclusion found in most property insurance policies eliminating coverage for earth movement or earthquake, except ensuing fire
Effective Date: The date on which an insurance binder or policy goes into effect
Electrical Damage or Injury Exclusion: An exclusion usually contained in property insurance policies eliminating coverage for damage to electrical appliances caused by artificially generated currents, except for ensuing fire or explosion
Employee Dishonesty Coverage: Coverage for theft of money, securities or property by an employee
Employee Leasing: A staffing method which an employee leasing company provides all or most of its client's employees
Employers Excess Indemnity Insurance: Insurance coverage purchased by employers that do not subscribe to the Texas Workers' Compensation law
Employers Liability Coverage: Part 2 of the Workers' Compensation policy which pays on behalf of the employer all sums that the employer becomes legally obligated to pay because of bodily injury by accident or disease sustained by any employee of the insured arising out of and in the course of his employment by the insured
Employment Practices Liability Insurance: A form of liability insurance covering wrongful acts arising from employment practices such as wrongful termination, discrimination and sexual harassment
Endorsement: A document attached to an insurance policy that changes the original policy provisions
Equipment Floater: A property insurance coverage for equipment that is often moved from place to place
Estimated Premium: A preliminary premium amount that could be adjusted based on a variance in exposures
Excess and Surplus Lines Insurance: Coverage that is provided by insurers not licensed in the states where the risk is located
Excess Liability Policy: A policy that provides additional limits in excess of an underlying liability policy
Exclusion: A circumstance or peril that is not covered by the policy
Expected or Intended: An exclusion for injury or damage that is expected or intended
Expediting Expense Coverage: Coverage providing reimbursement of expenses for temporary repairs and costs incurred to speed up the permanent repair or replacement of covered property or equipment
Expense Constant: A small flat expense charged to Workers' Compensation policies
Experience Modifier: A debit or credit factor developed by measuring the difference between the insured's actual past experience and the expected or actual experience of the class of business
Expiration: The ending date of an insurance policy
Exposure Base: The basis of rates that are applied to determine premium. Some exposures may be measured by payroll, receipts, sales, square footage, area, man-hours or per unit
Extra Expense Coverage: Coverage for reimbursement of expenses in excess of normal operating expenses that are incurred to continue operations after a direct damage loss
Extraterritorial Coverage: The coverage for extending workers' compensation law to provide benefits for workers hired in one state but injured while working in another state

Fiduciary Liability: The liability placed on trustees, employers, fiduciaries and professional administrators with respect to errors and omissions in the administration of employee benefit programs
Fine Arts Coverage: Property insurance for works of art
Fire Department Service Charge Coverage: Coverage in a property insurance policy for charges incurred by the insured from a fire department for their services in fighting a fire
Fire Legal Liability Coverage: Liability coverage for the insured's legal liability for fire damage to premises rented by the insured
Fire Wall: A wall designed to prevent the spread of fire from one part of a building to another
Firewall: A computer that protects a company's private network from outside internet users
Flat Cancellation: The full cancellation of a policy as of the effective date of coverage which requires the return of paid premium in full
Flood Coverage: Coverage for damage to property caused by flood
Flood Exclusion: A provision in most all property insurance policies eliminating coverage for damage by flood and possibly other types of water damage, such as seepage and sewer backup
Follow Form: An umbrella policy provision that follows the underlying policy for coverages and policy provisions
Forgery or Alteration Coverage: Covers loss due to the dishonesty of writing, signing or altering of checks and bank drafts
Fortuitous Event: An event that is subject to chance without the implication of suddenness
Frequency: The number of times that a loss will occur within any given period of time
Full Coverage: Any form of insurance that provides payment in full of all losses caused by the perils insured against without applying a deductible or depreciation

Garage Liability Insurance: Insurance coverage for the legal liability of automobile dealers, garages, repair shops and service stations for bodily injury and property damage arising out of their business operations
Garagekeepers Coverage: Provides coverage to owners of storage garages, parking lots and body and repair shops for their liability of damage to automobiles left in their custody for safekeeping or repair
General Aggregate Limit: The maximum amount of insurance payable during the policy period for losses (other than those arising from the products - completed operations hazards as covered under the standard commercial general liability policy)
General Liability Insurance: Insurance protecting businesses from most liability exposures other than automobile and professional liability
Glass Insurance: A property insurance policy covering breakage of building glass regardless of cause
Governing Classification: In Workers' Compensation Insurance, the classification that best describes the workers' compensation exposure of an employer's business
Gross Negligence: Willful and wanton misconduct
Gross Vehicle Weight (GVW): The weight specified by a manufacturer for the maximum total loaded weight of a single vehicle

Hired Automobile: An automobile whose exclusive use has been temporarily given to another for a monetary sum or other consideration. The business auto definition of 'hired autos,' however, includes autos borrowed except those borrowed from employees or partners
Hold Harmless Agreement: A contractual agreement that requires one contracting party to assume certain legal liabilities of the other party
Host Liquor Liability: Liability coverage for hosts of business or social functions arising out of the serving or distribution of alcoholic beverages by a party not engaged in this activity as a business enterprise

Improvements and Betterments: Additions or changes made by a lessee at his own expense to property that may not legally be removed. Usually covered under the tenants property coverage
Incurred Losses: The amount of paid claims and loss reserves within a particular period of time, usually a policy year. Customarily computed as losses incurred during the period, plus outstanding losses at the end of the period, less outstanding losses at the beginning of the period
Independent Adjuster: A claims adjuster who provides adjustment services to insurance companies but is not employed by them
Independent Contractor: An individual or company who has agreed, in writing, with another party to perform a job or function on behalf of that party
Inflation Guard Provision: A provision that increases the limit of insurance by a specified percentage over a specified period of time to offset inflation costs
Insurance to Value: Insurance written in an amount equal to the value of the property or which meets coinsurance requirements
Insurer: An insurance company that provides insurance coverage and other insurance-related services

Joint Venture: A business relationship when two or more persons join their labor or property for a business undertaking and share profits

Lapse: The termination of an insurance policy due to the failure to pay the premium
Leasehold Interest: Property insurance covering the loss suffered by a tenant due to termination of a lease because of damage to the leased premises by a covered loss
Lessee: The person to whom a lease is granted
Lessor: The person granting the lease
Liability: The legal obligation to pay a monetary award for injury or damage caused by one's negligent or statutorily prohibited action
Liberalization Clause: A provision within an insurance policy that broadens the coverage if the insurance company offers a broader coverage form within the first 45 days of coverage
Lien: An obligation that can be held by an individual who has an interest in a particular matter or property
Limit of Liability: The most an insurance company agrees to pay in the case of loss
Longshore and Harbor Workers' Compensation Act: A federal law that provides workers' compensation benefits to employees of a vessel injured in maritime employment - usually in loading, unloading, repairing or building a vessel - but not applicable to crew members
Loss: The amount an insurance company pays for damages under the terms of a policy
Loss Adjustment Expense: The cost assessed to a particular claim for investigating and adjusting that claim
Loss Constant: A flat charge added to the premium of small workers' compensation policies to offset higher loss ratios
Loss Control: A technique that is put in place to reduce the possibility that a loss will occur or reduce the severity of those that do occur
Loss Payable Clause: An insurance clause that authorizes loss payments to a person or entity having an insurable interest in the covered property
Loss Ratio: Percentage of losses incurred against earned premiums
Loss Report: A form showing reported claims which provides information such as the date of occurrence, type of claim, amount paid and amount reserved for each loss
Loss Reserve: An estimated amount set aside for a particular claim that has not yet been paid
Lost Policy Release: A signed statement by the named when the insured wishes to cancel the policy, but has lost or mislaid the policy, which releases the insurance company from all liability or losses

Medical Payments, Auto: Coverage, which is optional, under an auto policy to pay for medical expenses for bodily injury caused by an auto accident, regardless of fault. Coverage for persons other than the named insured and his or her family members is typically restricted to circumstances when they are occupants of the insured auto
Medical Payments, General Liability: A general liability coverage that reimburses others, regardless of fault, for medical or funeral expenses incurred as a result of bodily injury or death sustained by an accident
Mexico Coverage: Coverage which is sometimes provided under automobile policies for the operation of an insured motor vehicle within Mexico, usually limited to a stated number of miles from the U.S. border
Minimum Premium: The lowest amount of premium to be charged for providing a particular insurance coverage
Misrepresentation: A false or misleading statement, either directly or indirectly that, if intentional and material, can allow the insurer to void the insurance contract
Mobile Equipment: Equipment such as earthmovers, tractors, diggers, farm machinery, forklifts, etc., that even when self-propelled, are not considered as automobiles for insurance purposes
Monopolistic State Funds: States or Jurisdictions where an employer must obtain workers' compensation insurance from a state fund or qualify as a self-insurer, as is allowed in five of the states: North Dakota, Ohio, Washington, West Virginia, Wyoming, Puerto Rico and the U.S. Virgin Islands
Mortgage Clause: Property insurance provisions granting protection for the mortgagee named in the policy. It establishes that loss to mortgaged property is payable to the insured and to the mortgagee named in the policy

Named Perils Coverage: A property insurance term referring to exact causes of loss specifically listed as covered
National Flood Insurance Program: A federally funded program established to make flood insurance available to properties located in participating communities
Nonadmitted Insurer: An insurance company that is not licensed to do business in a specific state. The insurers may write coverage through an excess and surplus lines broker that is licensed in these jurisdictions
Nonowned Automobile: In commercial auto policies, coverage for autos that are used in connection with the named insured's business but are neither owned, leased, hired, rented or borrowed by the named insured. The term specifically applies to vehicles owned by employees and used for company business
Nonsubscription: A Workers' Compensation term used in Texas that refers to employers who choose to be out of the workers' compensation system. Firms that are proven negligent in causing a worker's injury, can be held liable in tort, since nonsubscribing employers waive the traditional common law defenses available to employers subject to workers' compensation laws

Occupational Disease: A condition or disorder that is caused by exposure to environmental factors associated with employment, including acute and chronic illnesses or diseases that may be caused by inhalation, absorption, ingestion, or direct contact
Occupational Injury: An injury arising in the course and scope of employment that is caused by factors associated with the work undertaken
Occurrence: A continual, gradual or repeated exposure to substantially the same general harmful conditions. General liability policies insure liability for bodily injury or property damage that is caused by an occurrence

Package Policy: A policy providing several different coverages combined into one policy. Refers to a policy providing both general liability insurance and property insurance
Payroll Limitation: A limit on the amount of payroll for certain classifications used for the development of premium
Peril: Cause of loss such as fire, windstorm, collision, etc.
Personal Auto Policy (PAP): A policy insuring private-passenger autos owned by individuals
Personal Injury: A General Liability coverage for insurable offenses that cause harm, other than bodily injury, such as false arrest, detention or imprisonment, malicious prosecution, wrongful eviction, slander, libel and invasion of privacy
Personal Injury Protection (PIP): An automobile insurance coverage mandated by law in some states. The statutes typically require insurers to provide or offer to provide first-party benefits for medical expenses, loss of income, funeral expenses and similar expenses without regard to fault
Personal Property: All tangible property not classified as real property such as contents
Policy Fee: A one-time charge per policy that does not change with the size of the premium
Policy Period: The term or duration of a policy including the effective and expiration dates
Pollutant: An irritant or contaminant, whether in solid, liquid, or gaseous form, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste
Premises: The location where coverage applies
Premises-Operations: A category of hazard ordinarily insured by a general liability policy which is composed of those exposures to loss that fall outside the defined 'products-completed operations hazard,' including liability for injury or damage arising out of the insured's premises or out of the insured's business operations while such operations are in progress
Premium: The amount of money an insurance company charges to provide coverage in a policy
Pro Rata Cancellation: The cancellation of an insurance policy with the return premium being the full proportion of premium for the unexpired term of the policy, without penalty for early cancellation
Product: Items manufactured, sold, handled, distributed or disposed of by the named insured or others involved with the named insured in the course of their business. Includes containers, parts and equipment, product warranties and provision of or failure to provide instructions and warnings
Product Liability: The liability for bodily injury or property damage a merchant or manufacturer may incur as a consequence of some defect in the product sold or manufactured
Products-Completed Operations: General Liability coverage for liability arising out of the insured's products or business operations conducted away from the insured's premises once those operations have been completed
Professional Liability: Coverage designed to protect professionals such as physicians and real estate brokers, against liability incurred as a result of errors and omissions in performing professional services
Property Damage: In the general liability policy, a physical injury to property, resulting in the loss of use
Property Insurance: First-party insurance for real and personal property against physical loss or damage

Real Property: Real estate including buildings and vegetation
Renewal Policy: A policy issued to replace an expiring policy
Rents or Rental Value Insurance: Insurance that reimburses a building owner for loss of rental income due to damage by an insured peril
Replacement Cost Coverage Endorsement: A property insurance provision that changes the valuation of covered property to replacement cost with no deduction for depreciation
Return Premium: The amount of premium due the insured should the actual cost of a policy be less than the insured previously paid
Robbery: Theft of property while force is used or threatened

Short-Term Cancellation: Cancellation of an insurance policy prior to the expiration date in which a penalty in the form of a less than full pro-rata premium refund is allowed
Special Causes of Loss Form: A cause of loss form providing coverage from all causes of loss unless specifically excluded or limited
Specified Causes of Loss Coverage: Auto physical damage coverage only for losses caused by the perils listed in the policy
Sprinkler Leakage Coverage: Coverage for property damage caused by the accidental discharge or leakage of water from automatic sprinkler systems or other fire prevention devices
Surplus Lines Insurance: Insurance written by insurers not licensed in the states where the risks are located and placed with such insurers under the surplus line laws of the various states. Before such placements can be made through specially licensed surplus line agents and brokers, state laws generally require evidence reported before some predetermined future date ('sunset')

Time Element Insurance: A term referring to property coverage for loss of earnings or income resulting from the inability to put damaged property to its normal use
Transit Coverage: Coverage on the insured's property while in transit from one location to another, over land

Umbrella Liability Policy: A policy designed to provide additional protection against catastrophic losses covered under liability policies, such as the business auto policy, commercial general liability policy, watercraft and aircraft liability policies and employers liability coverage. It provides excess limits when the limits of the underlying liability policies are used up by the payment of claims and it drops down and picks up where the underlying policy leaves off when the aggregate limit of the underlying policy in question is exhausted by the payment of claims. It also provides protection against some claims not covered by the underlying policies, subject to a self-insured retention
Underinsured Motorists Coverage: Provides coverage for bodily injury, and in some states property damage, for losses incurred by an insured when an accident is caused by a motorist who does not have sufficient insurance limits
Underlying Coverage: The insurance or coverage in place on the same risk that will respond to loss before the excess policy is called on to pay any portion of the claim
Unearned Premium: That portion of the policy premium that represents the unexpired policy term
Uninsured Motorist Coverage: Provides coverage for bodily injury, and in some states property damage, for losses incurred by an insured when an accident is caused by a motorist who is not insured
Utility Service Interruption Coverage: Coverage for the loss to an insured due to lack of incoming electricity which was caused by damage from a covered cause of loss, such as a fire or windstorm, to property away from the insured's premises - usually the utility generating station. Also referred to as 'off-premises power coverage'

Vacancy Provision: Property insurance provision found in commercial property policies that restrict coverage in connection with buildings that have been vacant for a specified number of days, usually 60 days
Valuable Papers and Records Coverage: Coverage that pays the cost to reconstruct damaged or destroyed valuable papers and records and usually includes almost all forms of printed documents or records except money or securities; data processing programs, data and media are usually excluded

Waiver of Subrogation: Also known as 'transfer of rights of recovery,' the relinquishment by an insurer of the right to collect from another party for damages paid on behalf of the insured
Workers' Compensation: Protection which provides benefits to employees for injury or contracted disease arising out of and in the course of employment. Most states have laws which require such protection for workers and prescribe the length and amount of such benefits provided
Ayala Insurance is a local, veteran owned company. We proudly serve the Phoenix metro area with offices located in Phoenix, Avondale, Glendale, Mesa, and Tempe.