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DAILY REPORTS

Copies of an insurance policy which are kept as the agent’s record and sent to the company or branch office either directly or through a stamping office.

DAMAGES

The sum claimed for damages allegedly sustained as a result of the act (or failure to act) of another party. The word "damages" as used in insurance is very broad, and may include loss as a result of injury, malfeasance , malpractice, errors and omissions, acts of God, etc. Compensatory Damages are damages which demand indemnification for measured loss. (See Indemnity.) Punitive Damages are those which are awarded by the court as punishment for the negligent act which caused the loss. (See discussion under Injury.)

DATA INPUT-OUTPUT DEVICES

See Input Device, Output Device.

DATA PROCESSING

The compilation and/or computation of data (facts) for the purposes of supplying information for decision making and/or storage and selective retrieval of such data. In the sense in which the term is used today, Data Processing (often referred to as “EDP”--for Electronic Data Processing) is a system of high speed manipulation of facts, made possible by a Computer System which consists of a (see) Central Processing Unit (CPU), the “brain,” to which are connected various devices for entering information (input) into the CPU, and extracting processed information from it (output). A computer system has two main functions:1.) compilation and computation of the facts (data) entered, and 2.) storage of the processed data bring out the data in any form or sequence requested by the user through the use of any of the (see) Output Devices.

DEAD HEADING

Operation of a tractor hauling an empty trailer (see also Bobtaillng.)

DEAN SCHEDULE

(Also known as the "Analytic System.") A system of measurement of exposure to fire loss, devised by Alfred E. Dean, Chief Engineer of the New England Insurance Rating Association, based on debits and credits applied to the basic rate. Adjustments are made in consideration of grade of fire protection, construction and height, housekeeping, nature of occupancy, density or neighborhood, etc.

DEBRIS REMOVAL

This clause, included as an "Additional Coverage" in policies covering property, provides for expense, up to a specified amount, of removal of debris resulting from damage caused by a covered loss.

DECK PAGE

A "Buzz" term meaning the Declarations section of an insurance policy.

DECLARATIONS

Information given by the insured on the basis of which a policy is issued: Name, address, nature, location and description of risk, coverage, amounts or limits, etc. Also included are the numbers and edition dates of the endorsements which are attached and become a part of the policy. The effective and expiration dates, the name of the insurance company and agent and the policy number are also shown.

DEDUCTIBLE

An agreed amount which, in the event of a covered loss, the insured must pay before the company pays the balance of the loss up to the limits of the policy. (See also Disappearing Deductible.)

DEED

A written agreement under seal by which real property is conveyed (title is transferred) from one party to another.

DEFAMATION

To damage, or to attempt to damage, the reputation of a person or group of persons by evil or false reports. (See also Libel and Slander.)

DEFENSE

The method(s) adopted by a person or other legal entity against legal proceedings have been taken, for the purpose of disputing charges of wrong-doing.

DEFENSE OF SUITS, SUPPLEMENTARY BENEFITS

All liability policies provide for the defense of the insured against any suit charging injury or damages, even if such charges are false and groundless. The company also agrees to pay, in addition to the limit(s) afforded, all costs of such defense. It is important to note, however, that the injuries or damages alleged in the claim must be of the type that would be covered by the policy if the charge could be proven. If not, the company has no obligation for defense.

DEFERRED PREMIUM PAYMENT PLAN (D.P.P.)

Method of annual payment of a three-year policy. Annual payments (not including Homeowners and Minimum Fire and some other Iines) are calculated by multiplying the three-year rate (usually 2.7 times the annual) by 35%, and multiplying the resulting figure by the amount (per $100) of insurance. The premium thus obtained is the annual premium payment (subject to the Minimum Premium rule.) Most policies are now "annualized." That is, annual rates or premiums are now shown, and three-year pre-paid premiums are determined by multiplying the annual rate or premium by three. If the insured elects to pay three years in advance, he may protect himself against any interim rate or premium increase during the three-year period. He may, however, prefer to have the policy issued for a three-year period, paying annually (DPP). In electing this method, he is charged for the second and third annual premiums which are in effect at the time they become due. This method of premium payment is called Annualization. Today most policies are for a one-year period only.

DEMOLITION CLAUSE

Fire and Homeowners policies exclude indemnification for demolition of undamaged portions of a building by reason of "any local of state ordinance or law regulation construction, repair or demolition." Coverage can be added for an additional premium.

DEPOSIT PREMIUM

1.) The initial premium paid under an installment payment plan or (see) Deferred Premium Payment Plan (D.P.P.); 2.)The estimated premium paid under an audit policy when the actual premium, cannot be determined until after the policy has expired. (See Audit Policy.)

DEPRECIATION

The allowance taken for age, wear and tear and obsolescence of any item, consideration being made of the probable useful life the item may have had. It is important to remember that the depreciation factor is applied to the replacement value at the time of the loss and not to the original cost new of the item.

DEPRECIATION INSURANCE

See Replacement Cost Insurance.

DEVIATION

A rate or premium, usually lower, which differs from the standard rate or premium filed with the state insurance department having jurisdiction. In many states "File and Use" laws have been passed, under which a company may simply file a schedule of rates, and proceed to use them. They will remain in use unless the Commissioner of Insurance contests them. In these states, the bureaus issue rate schedules on an "advisory" basis.

DIARY FILE

See Suspense File.

DIFFERENCE IN CONDITIONS INSURANCE (D.I.C.)

A form of insurance protection usually written for large industrial or commercial property risk in order to cover gaps in the standard coverage. Usually tailored to meet the particular needs of the insured. Normally the responsibility of Inland Marine Departments, the contract may be written separately or may be included in the basic policy by proper endorsement. Can include -Water Damage, Flood, Collapse, Earthquake, Landslide and other accidental occurrences not contemplated in the original contract.

DIRECT BILLING

A System whereby the company bills the insured direct for renewal premiums, and the insured remits directly to the company, or pays the agent, who in turn sends the full premium payment on to the company. The agent receives a monthly statement listing all transactions (including additional and return premiums paid), accompanied by his commission check for the month’s business. In most cases under Direct Billing, the agent performs his usual functions, such as claim reporting and other services.

DIRECT DAMAGE (OR LOSS)

Directors and officers of corporations may be held personally liable for damages resulting from negligent or wrongful acts even though acting in the name of the corporation. This insurance protects these individuals and reimburses the corporation (and sometimes even the individual directors and officers) for necessary legal expenses incurred for defense. Usually written with a high deductible.

DIRECT LOSS

See Direct Damage.

DIRECT WRITER

An insurance company which sells insurance directly to the insured without benefit (either to the company or to the insured) of the services of an independent agent. Captive Agent: A term in general use describing an employee of a Direct Writer who is engaged in a sales capacity. Also applies to a person who sells insurance for a Direct Writer on a commission basis, and who, by terms of his contract, cannot effect or service insurance for any other company.

DIRECTOR OF INSURANCE

See Commissioner of Insurance.

DIRECTORS AND OFFICERS LIABILITY INSURANCE

A request for indemnification. (See Indemnity.) First Party Claim: A request for indemnification for a loss involving only the insured and his insurance company. Third Party Claim: A request for indemnification of a loss by other than the insured (a "Third Party") for damages alleged to have been caused by the insured. The term "Claim" also is used to refer to the estimated amount of the loss.

DISABILITY

Physical and/or mental inability to function in a normal manner as a result of physical injury, illness or disease. There are varying degrees of disability: Partial or total; temporary or permanent.

DISAPPEARING DEDUCTIBLE

A deductible which is reduced as the loss increases until, at a given point, the deductible ceases or "Disappears" entirely. For example, in a Homeowners policy, if a $50 "Disappearing Deductible" applies, the company pays 111% of any loss in excess of $50. Thus, if the loss is $250, the company will pay $222 (111% of $200), leaving the insured with only $28 to pay. When the loss reaches $500, the insured pays nothing (111% of $450 equals $499.50) In the case of $100 “Disappearing Deductible,” the factor used to apply to the amount of the loss in excess of $100 is $1 25% of $300 (the excess over the $100 deductible) would amount to $375, which is the amount the company would pay, leaving the insured’s contribution only $25. As in the case with the $50 “Disappearing Deductible,” in a $500 loss, the insured pays nothing. (125% of $400 equals $500.)

DISCOVERY BOND

A fidelity bond covering the insured’s bonded employees retroactively to the date of their original employment, even if they had not been bonded previously. See Superseded Suretyship Rider and Bond.

DISCOVERY PERIOD

When a bond expires, there may have been a loss during its term which has not yet come to light. A period of time can be allowed under the terms of the bond followed expiration or cancellation to allow the insured to "discover" his loss. The time allowed is called the "discovery period." See also above and Bond.

DISINTERESTED PARTY

See Party.

DISPLAY TERMINAL

A device connected to a computer system by cable or microwaves with a screen ("CAT") and keyboard used for input and output of data.

DISTRIBUTION CLAUSE

See Coinsurance and Pro Rata Distribution Clause.

DIVIDEND

A share in the profits (if any) usually arrived at as a percentage of the premium earned by a given policy at its termination, which is returned to the policyholder of a Mutual or a Stock Participating company. Dividends are paid in accordance with the dividend rate in effect as of the termination of the policy, and can never be guaranteed in advance. In the event of cancellation of a policy during its term, the dividend is figured on the earned premium (see “Premium”), and is known as the earned dividend. Dividends may also be declared from time to time to stockholders in a Capital Stock Company out of earnings. See Mutual, Stock Participating and Capital Stock companies.

DIVISION WALL

A wall, usually of brick, masonry or stone, which separates two sections of a building, runs from the basement floor through the roof and above and has no openings. Sometimes called a "Fire Wall," this construction makes possible lower fire rates for the two -sections.

DOMESTIC CARRIER (OR COMPANY)

An insurance company doing business in a state in which its home office is located.

DRAFT

See Numismatic Property.

DRAFT AUTHORITY

The authority given to an agent or adjuster to issue drafts in payment of losses. This authority is limited as to types of claims and amounts paid.

DRAM SHOP LAWS

Laws which impose special liability for damages or injuries arising out of the sale of liquor. Coverage for this exposure is excluded under the usual liability.

DRIVE OTHER CAR COVERAGE

The private passenger automobile policy provides protection for the insured when driving automobiles other than the one(s) described in the policy. This extension in coverage is limited in that it excludes operation of owned vehicles and those which are furnished for the regular use of the insured. The insurance on the borrowed automobile is (see) “Primary” for liability and physical damage, and the insurance on the insured’s (owned) automobile is (see) “Excess” in the event of an accident or other covered loss. In “No-Fault,” the reparations benefits or “Personal Injury Protection” (PIP) afforded under the insured’s (borrower’s) automobile is primary, and any such benefits which may cover the borrowed automobile are not available to the borrower, since they are not considered "excess," and do not operate in the above situation.

DRIVER TRAINING CREDIT

A credit allowed by insurance companies in consideration of a young driver having successfully completed a driver training course approved by the state board of education and/or the state motor vehicle department.

DWELLING FORMS (FIRE)

In addition to the regular forms for Dwelling Building(s) and Contents, Office Furniture, Fixtures, Instruments and Supplies in buildings otherwise designed and occupied solely for dwelling purposes, there are two forms commonly used for dwellings: Broad Form: ($100 Deductible applicable to all perils.) Covers dwelling building(s) and/or contents for broad named perils. Special Building Form: ($200 Deductible applicable to all perils.) An All-Risk coverage for dwellings (not contents) and excludes only specified exposures. Under the above forms, Dwellings designed for occupancy by more than 4 families or subject to farm rates are not eligible. Also, these forms are not recommended if property otherwise qualifies for Homeowners policy.