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BAIL BOND

A bond which guarantees the court appearance of a person to answer a legal summons. If the person fails to appear, the bondsman or bonding company (the "surety") must pay the amount of the bond to the court. See definition of "Bond."

BAILEE

One who assumes possession, but not ownership, of goods in accordance with an expressed or implied contract, usually for the purpose of servicing, storage or transportation of such goods. In assuming custody the bailee becomes legally liable for the property. For example: Furniture Movers, Laundries, Dry Cleaners Upholsterers, T.V. Repairers, etc.

BAILEE’S CUSTOMERS POLICY

This policy covers loss or damage to customer’s property while in the custody of the bailee whether or not the bailee is legally liable for the loss, with certain limitations and exclusions.

BAILOR

The owner of goods in the custody of a bailee.

BARRATRY(MARINE)

Pertaining to any willful and unlawful act committed by the master or mariners of a ship as a result of which the owners suffer damage to the ship and/or cargo.

BASIC AUTOMOBILE POLICY (BAP)

When ownership of an automobile is by other than an individual or by husband and wife, or is classified as a "Commercial" vehicle, the Basic Automobile Policy (BAP) must be used. This policy is in many ways not as broad as the Family Automobile Policy (FAP) or the Personal Automobile Policy (PAP). The latter makes no mention of other family members resident in the same household. There is limited coverage also on non-owned automobiles, and the addition of the Broad Form Drive Other Car Coverage is recommended.

BASIC LIMITS

An amount of liability insurance for which the minimum premium is charged. If the insured wishes a larger amount, this is called "Increased Limits," and a percentage ("Factor") of the minimum rate or premium is charged in addition to the minimum premium.

BASIC REPARATIONS

As used in No-Fault Automobile Plans, these are benefits reimbursing persons suffering economic loss through injury arising out of the ownership, maintenance, or use of a private passenger motor vehicle.

BATCH PROCESSING

When large quantities of data (items of original entry such as invoices, credit memos, payments, etc.) do not require processing as soon as they are generated, all similar transactions affecting a master file can be processed at one time (say once a day), the files updated and outputs produced. This procedure is know as "batch processing." (Compare to On-Line and Real Time Processing.)

BEACH PLAN

A "Pool" plan similar to the fair plans and the auto assigned risk plans, underwritten by all companies writing fire insurance, to provide fire and extended coverage for risks with high exposure in the so-called "Hurricane Belt." (The "Gulf" states plus the south Atlantic states north to include North Carolina.) Eligibility requires that the property to be certified complies with wind resistance standards according to the Southern Standard Building Code.

BEAUFORT SCALE

A system of classifying the intensity of wind based on "Gale Force" in miles per hour: 'Moderate,' 32 to 38; 'Fresh,' 39to 46; 'Strong,' 47 to 54; 'Whole,' 55 to 63 miles per hour. A 'Storm' is defined as having winds from 64 to 75 miles per hour, and a 'Hurricane' in excess of 75 miles per hour. (see Windstorm.)

BENCH MARK

Term sometimes used to mean "Threshold." See No-Fault.

BENEFIT

The usual dictionary definition of this word is at odds with its meaning in insurance. Most dictionaries describe "benefit" as profit, advantage, or privilege. In insurance, a "benefit," such as those under Reparations Benefits or Personal Insurance Protection (No-Fault Plans) or Worker’s Compensation, does not contemplate profit, but rather a partial compensation for lost wages or disability. A basic principle of insurance is that an individual should not end up in a better financial or physical (including property) condition as a result of a loss than before.

BETTERMENTS

See Improvements and Betterments.

BID BOND

A bond required of a contractor who bids for work which is to be awarded to the lowest bidder. The bond is forfeited in the event the contract is awarded to him and he fails to enter into such contract. See definition of Bond; Performance Bond.

BILL OF LADING

A receipt from a carrier which describes in detail the merchandise or other property which is to be transported by him, and stipulates the carrier's duties with regard to the property. (See also Bailee and Common Carrier.)

BINDER

A legal written or oral agreement issued by either an agent or a company, limited in term to a specific number of days, to effect immediate insurance in cases where sufficient information or time prevents a policy from being issued. A binder should include all pertinent information available, state the type of insurance, the limits, the perils insured against and (when issued by agent) designate the insurance carrier. Oral binders, although legally binding within the limits of the agency agreement, are dangerous, and should be executed without delay, with-copy to company in which the risk is bound.

BLANKET CATASTROPHE EXCESS LIABILITY

See Umbrella Liability.

BLANKET INSURANCE

A policy which covers two or more items under a single amount (e.g. Buildings and/or Contents), or two or more locations, or a combination of items and/or locations. (See also Specific Insurance and Pro Rata Distribution Clauses.)

BLANKET RATE OR PREMIUM

See Average Rate or Premium.

BLOCK POLICY

An inland marine policy covering the property of a merchant, wholesaler or manufacturer, including property of others while in his custody, property on consignment, property sold but not delivered. The policy covers against loss by most hazards including transportation. Most common forms are jeweler’s block and furrier’s block policies, and these contain many restrictions and limitations.

BOBTAIL (DEAD HEADING) LIABILITY

Auto Liability Insurance for the independent truckman who leases his equipment to trucking firms. This insurance protects him against third party claims when his vehicles operate beyond the bounds of the leasing agreement as for example when they are in for repairs or maintenance, and the lessee’s insurance does not operate. Operation of a tractor without a trailer is know as "bobtailing;" operation of a tractor with an empty trailer is called "dead heading."

BODILY INJURY

The term "Bodily Injury" includes sickness or disease including death at any time resulting there from, sustained by any person or persons, caused by accident and arising out of one or more of the hazards insured against in the policy.

BODILY INJURY LIABILITY INSURANCE

Protection against liability imposed bylaw on the insured for bodily injury as described above, to any person except employees. (See Worker’s Compensation.)

BOILER AND MACHINERY INSURANCE

A combination of liability and physical damage insurance covering loss arising from the operation of boilers, pressure vessels, mechanical and electrical equipment and machinery. Coverage may be written on a "Named Perils" or an "All-Risk" basis, and may be extended to include business interruption and consequential damage.

BOND

An agreement by one party (the Surety) to a second party (the Obligee) guaranteeing the honesty, integrity, ability, financial responsibility and compliance with the law and/or a specific contract of a third party (the Principal). Simply stated, the Surety guarantees to the Obligee the satisfactory performance of the Principal.

BOOK OF BUSINESS

An expression of long standing meaning all insurance accounts of a particular agent, producer, marketing representative, general agent division office or other similar category. Sometimes referred to simply as "book," the term is usually preceded by an adjective. For example: "He (the agent, marketing rep, division manager, etc.) has a good ‘book of business."--meaning profitable; or "...a balanced ‘book of business"--the desired ratio of personal to commercial lines or a "large book"--high volume.

BORDEREAU

A list itemizing in detail a (usually large) number of transactions, documents or policies. When a large number of such items is sent to another company or department, a Bordereau usually accompanies it for transmittal and checking purposes.

BROAD FORM

Term indicating a more comprehensive form of coverage (as opposed to a "Limited" form). Examples are "Broad Form Personal Theft" and "Broad Form Storekeepers" policies. See also Dwelling Forms.

BROAD FORM, DWELLING AND CONTENTS

See Dwelling Forms.

BROKER (OR AGENT) OF RECORD

An agent or broker designated in writing by the insured to examine or copy the make-up of a rate, to apply for a specific rating or re-rating because of changes in occupancy or to inquire as to the effect on a rate of proposed changes in the physical condition or use of the property. Rating Bureaus will generally not cooperate with a broker or agent who is not designated in writing by the insured as his broker or agent "of record." The statement signed by the insured is known as the "Agent (or Broker) of Record Letter."

BUDGET PAYMENT

See Installment Premium.

BUFFER LAYER LIABILITY

See Gap, or Buffer Layer Liability.

BUILDER’S RISK INSURANCE

Insurance against loss to builders, including machinery and equipment, in the course of construction, and to materials incidental to construction.

BUILDER’S RISK INSURANCE

Lines of insurance which are allied to Property Insurance, such as Water Damage, Rain Insurance, Business Interruption or Sprinkler Leakage, etc.

BULLION

Gold and/or silver considered for its value as metal. Includes -coins, but does not take into consideration their value as coins. (See Numismatic Property.)

BUMBERSHOOT LIABILITY

A form of umbrella liability where the principal exposure is "wet" marine involving the operation of vessels and the use of docking facilities. Covers the insured for Protection and Indemnity, General Average, salvage charges, collision, fire, Sue and Labor and all other legal or contractual liability including Longshoremens and Harborworkers Compensation Act, Employer’s Liability, liability under Admiralty Law, automobile liability and other hazards usually related to liability insurance.

BURDEN OF PROOF

1.) Insurance: The obligation on the part of the insured to prove he sustained a covered loss and to provide evidence supporting the amount of his claim. 2.) Legal (Civil): The obligation on the part of the alleged injured party (the plaintiff) that a third party (the defendant) is the proximate cause of his injury or loss; (Criminal): The obligation on the part of the state (through the prosecutor) to justify the action against the accused by providing the charge.

BUREAU, RATING

See Rating Bureau.

BURGLARY

Unlawful entry into premises by actual force and violence, evidence of which must be in the form of visible marks made by tools, explosives, chemicals or electricity. (See also Premises and Theft.)

BUSINESS INTERRUPTION INSURANCE

Indemnifies the insured for loss of income caused by interruption of business operations as a result of fire or other insured perils. Also called "Use and Occupancy" insurance. (See also Extra Expense Insurance, Time Element, and Gross Earnings Form.)

BUYBACK

Term commonly used to refer to an exclusion of certain coverage in a policy which the company may be willing to eliminate upon payment of an additional premium.