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RADIOACTIVE CONTAMINATION

This exposure in Property Insurance is specifically excluded under the "Nuclear Hazard Clause," meaning damage resulting from any nuclear reaction, radioactivity or radioactive contamination however caused, either directly or indirectly, except the direct loss by fire resulting from the nuclear hazard is covered. "Radioactive Contamination Assumption" endorsements have been developed for certain risks (hospitals, etc.) by associations and pools specializing in these exposures.

Liability coverage is excluded under all policies, and those engaged in activities which might give rise to resulting damage or injury to others must obtain the coverage through one of the pools or associations. Information can be obtained from the Atomic Energy Commission. (AEC).

RAIN INSURANCE

A special form of insurance providing indemnity for loss of income, anticipated profits or expenses incurred because of rain, hail, snow or sleet. It is written for those who have a financial interest in any event which might be jeopardized in the event of inclement weather, such as a fair or a department store sale. The terms of the policy are quite specific as to the exact amount of precipitation, and the hours between which it must fall. United States Weather Bureau Figures are generally the criterion, although other mutually agreed upon authorities can be used.

RANDOM ACCESS

The process by which stored data may be retrieved without having to read all the records that precede it. Magnetic disks make this operation possible; magnetic tape or punch card systems do not.

RATE

In Fire and Marine ("Property") insurance, the per unit (usually per $100 of value) charged for insurance coverage for a specified period of time, expressed in dollars and cents or a percentage of the amount of insurance desired. In Casualty insurance, the rate is the amount which is charged by the company per unit of exposure to loss. The "unit" may be location, classification, occupancy, each $100 of payroll or receipts, or other measurement of exposure. The rate multiplied by the unit used results in what is called the Premium. (See Premium.)

RATE CARDS

Rates on specifically rated risks are indexed by the Rating Bureau on "Rate Cards." Also known as "Tariff Cards."

RATE, AVERAGE

See Average Rate.

RATE, BLANKET

See Average Rate.

RATE, ADVISORY

See File and Use Under Deviation and Rating Bureau.

RATE, CLASS

See Minimum Rates.

RATE, MINIMUM

See Minimum Rates.

RATE, PRO RATA

A rate for a short term policy, based on the regular rate for the annual period, but Pro-Rated for the period in force. Usually used, for example, for a dwelling under construction when policy at the regular rate is to replace it on completion of construction. (See Pro Rata definition.)

RATE, PUBLISHED

See Promulgate.

RATE, SCHEDULE(D)

Also known as Specific Rate. See Promulgate and discussion under Minimum Rates.

RATE, SUBJECT

See Subject Rate.

RATE, TERM

See Term Rate.

RATING

The determination of the premium based on the classification of the risk, the amount or limit desired and other factors such as particular exposure to loss, experience of similar risks and other considerations. (See also Experience Rating, Merit Rating.)

RATING BUREAU

The determination of rates which will adequately measure exposure to loss requires person with highly developed technical skills who are able to collect and analyze data in order to make projections as to the relative exposure to loss of various classes of risks, They must be able to predict, with some degree of accuracy, the possibility of loss. These specialists ("actuaries") have no crystal ball, and must base their predictions on what has happened in the past (the "experience"). Computers have made the collection and analysis of the available data much faster and more accurate.

It stands to reason that such an operation as described above would be rather expensive for individual companies to support on their own. Central organizations to perform the function of rate-making were set up by groups of companies ("subscribers") and are called Rating Bureaus.

Rating Bureaus make available to individual subscribing companies (and to others for a fee) valuable information and services such as rate-making at far less expensive, and with the additional advantage that the collective experience of the member companies make possible much more predictable results. Rates promulgated by rating bureaus are not necessarily mandatory for all lines and all states. Most are now "Advisory" depending on state law, and are used as guides for companies filing rates schedules with regulatory agencies. The latter procedure is sometimes called "File and Use."

RATING OFFICE

See Stamping Office.

REACTION, NUCLEAR

See Radioactive Contamination.

REAL PROPERTY

Real estate (land and/or buildings) as opposed to personal movable property.

REAL-TIME PROCESSING

The use of monitoring terminals feeding information to the computer which is used immediately to modify the programming. An example would be a process-control computer in a chemical plant. Not the same as On-Line Processing, which does not change the program, but immediately updates the file in accordance with the program.

REASONABLY PRUDENT, REASONABLE CARE

In cases of alleged negligence, these terms are used. For example, did the individual so charged fail to use the care that a reasonably prudent person would be expected to use under like circumstances, either by taking some action which would be expected of a reasonably prudent person, or did he fail to take action as such a person would be expected to take? The law imposes a duty on every person to exercise "reasonable care" to a degree relative to that individual’s age and experience, with a greater degree expected of a person deemed to have superior skill, knowledge and experience. (See Negligence.)

REBATING

The selling of an insurance policy for less than the established rate; the sharing of a commission with a person who is not a licensed agent; giving the insured or any other person anything of value in return for the opportunity of writing such a policy--all of these are acts of rebating, which is not only illegal but unethical. The term "Rebate" is sometimes erroneously used in place of "Return Premium." See that definition under Premium.

RECIPROCAL

A group of individuals who get together to form an organization (sometimes called an "inter-Insurance Exchange") to share losses and expenses. Best described as group self-insurance, since all members are both insureds and insurers, somewhat along the lines of a Mutual Company. Each member gives power of attorney to an Attorney-in-Fact who manages the exchange. (See also Self-Insurance, Mutual Company, Power of Attorney, and Attorney-in-Fact.)

RECOVERY

The amount of money received by an insurance company after paying a loss from subrogation, salvage or reinsurance.

REDLINING

The practice of insurance companies in designating certain geographical areas which, by experience have been shown to produce disproportionate loss frequency and/or severity relative to other comparable areas. The use of "redlining" is termed discriminatory.

REDUCED RATE CONTRIBUTION

See Coinsurance.

REFERRAL RISK

A risk of an exposure or limit beyond the underwriting authority of a branch or regional office which must be submitted to a higher level for consideration.

REGISTERED MAIL

This service of the U.S. Postal Service is used for valuable papers, etc. and is similar to treatment to (see) "Certified Mail," except that a monetary value is placed on the contents (insurance), it travels with other Registered Mail under lock and key, and every postal station along the way must record its receipt. It is not handled with the regular First Class mail. The options for "Return Receipt Requested" and "Restricted Delivery" are open to the sender at additional charge as with "Certified Mail." (See Certified Mail.)

REIMBURSEMENT

Payment as an equivalent for what has been spent or lost; refund; indemnity. For example, return premium paid by company to insured for cancellation of a policy or an endorsement reducing a. premium charge; also the insured’s share of recovery (minus expenses) as the result of (see) Subrogation.

REINSTATEMENT, AUTOMATIC

See Automatic Reinstatement.

REINSTATEMENT, AUTOMOBILE

See Suspension--Automobile.

REINSURANCE

A method by which an insurance company protects itself against unusually large losses. For a premium, such a company (the "Ceding carrier") purchases reinsurance from another company (the "Assuming carrier") which agrees either to pay the primary company the excess over an agreed amount in case of a large loss ("Excess Cover"), or to reimburse the primary company a fixed percentage ("Quota Share") of every loss it has to pay, regardless of size. The reinsurance contract between the carriers is called a "Treaty."

REJECTION

The refusal of an insurance company to write a policy for an applicant.

RELEASE (OF ALL CLAIMS)

A legal document executed by (or on behalf of) a person claiming injuries or damages, stating that, in consideration of a specified number of dollars, he agrees to accept that amount of money in full satisfaction of any claims he might have now or in the future, and to bring no further action for recovery in connection with that particular claim. An insurance company, even though it might supply the money and arrange for the execution of the release, is rarely, if ever, named in the release. Only the "First Party" (the insured) and the "Third Party" (the claimant) are named in the release.

REMOVAL OF DEBRIS

See Debris Removal.

REMOVAL, AUTOMATIC

See Automatic Removal.

RENEWAL

Continuation of insurance coverage for an additional specified period of time beyond the original (or previous) date of expiration by use of a renewal certificate or renewal policy.

RENEWAL CERTIFICATE

A certificate signed by an authorized agent as evidence that a policy is being extended for a specified period of time upon payment of the required premium.

RENT INSURANCE

Reimburses the landlord of a tenant-occupied building for loss of rental income when the building becomes partially or totally untenable because of a fire or other peril insured against. This is one of the so-called "Time-Element" coverages.

RENTAL VALUE INSURANCE

Same as "Rent Insurance" except for owner-occupied buildings. Reimburses the owner for the cost of renting elsewhere.

REPARATIONS BENEFITS

See No-Fault Auto Insurance.

REPLACEMENT COST COVERAGE

This guarantees the replacement cost new of any property destroyed by a covered hazard without allowances for depreciation, provided insurance to value or a specified percentage of value is carried.

Depreciation Insurance provides the difference between what would be paid by an Actual Cash Value policy and full replacement cost. Replacement Cost coverage is automatically included in Homeowners forms, providing the building at the time of the loss is insured for 80% or more of the full replacement cost, but this feature applies to buildings only, unless replacement cost coverage is attached to the policy. (See Personal Property Replacement Cost.)

REPORTING POLICY

A policy generally used when the insured’s inventory fluctuates (seasonal, etc.). It requires the insured to report at certain specified intervals the actual value of stocks or goods or other types of property on hand. An initial deposit (estimated) premium is usually charged, and the final premium is determined at the end of the policy period when the actual values are known, at which time the premium adjustment is made. Some policies, such as a Bailee’s Customers policy, are based on gross receipts rather than values, and such receipts are "reported" periodically (usually monthly) also.

REPRESENT

An agent who is licensed by the state to act for an insurance company is said to "represent" that company.

REPRESENTATION

See Condition.

RES IPSA LOQUITOR

Although as pointed out in the section on "Negligence," the burden of proof lies with the injured party, there are some accidents which occur under circumstances which make the question of burden of proof academic. When evidence of prudent and reasonable care is patently absent, but direct evidence to the contrary is not available (to establish the negligence of the defendant), and the injured person is without fault, the courts usually resort to the doctrine of "Res Ipsa Loquitor" (Res, ‘the thing’---lpsa, ‘for itself’---Loquitor, ‘speaks’) or "The thing speaks for itself." In short, the circumstances of the accident itself leaves no room but for the inference of negligence of the defendant.

RESERVE

Monies received which are set aside for specific purposes. Principal among these in the insurance industry are (see) Loss Reserve and Unearned Premium Reserve.

RESERVE, LOSS

See Loss Reserve.

RESERVE, UNEARNED PREMIUM

See Unearned Premium Reserve.

RESIDENCE EMPLOYEE

An employee of any insured whose duties are in connection with the maintenance or use of the insured premises, including the performance of household or domestic services, or who performs elsewhere duties of a similar nature not in connection with any insured’s business. The term "Residence" excludes premises used for commercial farming.

RESIDENCE GLASS COVERAGE

Although this coverage may be added to other policies by endorsement, it is most commonly found in the Dwelling Policy and Homeowners Forms, where it is automatically included. Residence glass is defined as that which is a permanent part of the building including storm doors and windows. The word "glass" includes safety glazing (e.g. Plexiglass, etc.), and when breakage of glass is required by ordinance or law to be replaced with safety glazing materials, the company will pay for such replacement. There is no coverage for glass if dwelling is vacant for 30 consecutive days immediately preceding the loss. A building under construction is not considered as being "vacant." A "Scheduled Glass" endorsement is available for an additional premium if desired by the insured. In this case, each piece must be described as to its location, dimensions and replacement value. In addition, the standard Deductible, Loss Settlement conditions do not apply, and the company will pay for making necessary installations and for removing and replacing obstructions because of loss to glass. (See also Comprehensive Glass Policy.)

RESIDUAL MARKET

Those risks which by nature, history or high exposure are not generally accepted by insurance companies as desirable, constitute the "Residual Market," e.g. (see) Assigned Risk or Fair Plan. These plans have been devised to provide needed insurance protection for risks unable to be secured in the "Open Market." (See also Voluntary Market.)

RESTORATION PREMIUM CHARGE

The charge made to reinstate the original limit or face amount of a policy after a loss has been paid. (See Automatic Reinstatement.)

RESTRICTION OF TRADE AGREEMENT

An agreement usually incorporated in an employment or business (e.g. and Insurance Agency) sale contract, providing that the employee (or seller) upon leaving employment(or selling his business) is restrained from competing with his former employer (or with the purchaser of the business) within a specified geographical area and within a specified time. Such agreements cannot be made so as to keep an individual from making a living; the restrictions of area and time must be reasonable, or that portion of the contract may be declared invalid. Restriction of Trade Agreements are often included in contracts of employment or sale of insurance, real estate or travel or other personal service businesses.

RETENTION

That portion of a risk "retained" by the primary carrier (the "ceding carrier") when there is reinsurance. (See Reinsurance.)

RETENTION OF PREMIUM

See Minimum Premium.

RETENTION, FIFTY PERCENT ("50-50" POLICY)

A Comprehensive Glass Policy written with the agreement that insured pays 50% of the annual premium, and pays no more if there are no losses during the policy period. The insured assumes losses up to the amount of the 50% "retention" (portion of the full premium he did not pay), and when and if he has losses in that amount, he pays no more and has full coverage for the remainder of the policy period.

RETROACTIVE RESTORATION

The clause in an insurance policy providing for automatic restoration of the original limit to cover future as well as prior undiscovered losses. Frequently used in bonding.

RETROCESSION

A "Layer Cake" operation. A reinsurance company may "chicken out" (it has a right to), feeling that it has taken ("assumed") a greater portion of a risk than it should have, and may "cede" to another reinsurer a portion of its share, sort of "hedging the bet." (See Reinsurance.)

RETROSPECTIVE RATING

A rating plan under which the final premium is determined by the loss experience during the policy period.

RETURN COMMISSION

See Commission.

RETURN FOR NO CLAIM

A detailed set of instructions given to the computer telling it what kinds of input data it will receive, what operations it will perform on it and what form of output to produce.

PROHIBITED LIST

A list provided by the company to the agent outlining the classes of risks which it will not insure under any conditions. A Prohibited Risk is the same, except that it refers to a particular risk.

RETURN PREMIUM

See Premium.

REUNDERWRITING

A procedure similar to an IRS Audit used by a company to review the risks of a particular agent or class of business. -Usually employed to try to locate and "weed out" poor or marginal risks.

RIDER

See Endorsement.

RIOT

The legally accepted definition of a "riot" is a violent disturbance of the public peace by three or more persons acting in unison and with purpose, often resulting in widespread vandalism, looting and attacks on innocent bystanders.

RISK

The thing or person insured; the possibility of loss; the hazard insured against.

RISK MANAGEMENT

An organized service for large commercial, industrial, institutional and government risks which may serve a number of different functions, ranging from risk recognition to loss prevention and control. A risk management operation is usually management-oriented and, although overlapping to some degree the services provided by the insurance agent and broker, does not have as its main thrust the production of premium. Risk management can be part of management, an independent consulting service or a risk management company or individual on contract or retainer. Risk management analyzes all exposures, examines all options, recommends courses of action, implements approved programs and continuously monitors their operation, or any combination of these. Their suggestions may include, where indicated, the adoption of partial or total risk assumption on all or certain of the exposures, risk transfer to self insurance (with partial, selective or no reinsurance), an association mutual, a captive insurer or a composite of these options. Risk managers may assist in the placement of coverages or supply related supporting services such as claims handling, inspections, occupational health and industrial hygiene educational programs and compliance with government regulations.

RISK, ASSIGNED

See Assigned Risk.

ROBBERY

The forcible taking of property with felonious intent from the owner or custodian of such property by actual or threatened violence. (See also Burglary.)

ROUNDING (OF PREMIUM) RULE

See Whole Dollar (Premium) Rule.

RUNNING DOWN CLAUSE

A provision in the Ocean Marine Hull Policy which covers the insured for liability damage done to another vessel by collision. (See Hull Policy.)