AAL (Average Annual Loss)
The expected long‑term average loss per year from a specific risk, often produced by catastrophe or risk models.
ACV (Actual Cash Value)
The replacement cost of property minus depreciation.
Aggregate Limit
The maximum amount an insurer will pay for all covered losses during a policy period.
Attachment Point
The loss amount at which an excess or reinsurance policy begins to pay.
BI (Business Interruption)
Coverage for lost income and continuing expenses resulting from a covered property loss.
Cat Model (Catastrophe Model)
A model used to estimate potential losses from natural disasters such as hurricanes or earthquakes.
Ceding Company
An insurer that transfers (cedes) risk to a reinsurer.
Claim
A request by the insured for payment under an insurance policy following a loss.
Claims‑Made Policy
A policy that covers claims reported during the policy period, regardless of when the loss occurred.
COI (Certificate of Insurance / Cause of Loss)
Either a document proving insurance coverage or the portion of a policy defining covered perils, depending on context.
Coverage
The specific risks or losses protected by an insurance policy.
Deductible
The amount the insured must pay before insurance coverage responds.
D&O (Directors & Officers Insurance)
Liability coverage protecting company leadership against claims alleging wrongful acts.
E&O (Errors & Omissions)
Professional liability insurance covering financial losses caused by mistakes or failures in professional services.
Excess Insurance
Coverage that applies after an underlying policy’s limit has been exhausted.
Exposure
The extent to which a person, property, or organization is subject to potential loss.
Facultative Reinsurance
Reinsurance purchased for a specific, individual risk.
GL (General Liability)
Coverage for bodily injury or property damage claims made by third parties.
Insured / Policyholder
The individual or entity covered by an insurance policy.
Insurer / Carrier
The company that underwrites and issues insurance policies.
Limit (Limit of Liability)
The maximum amount an insurer will pay for a covered loss.
Loss
Physical damage to property or bodily injury, including loss of use or loss of income.
Loss Adjustment Expense (LAE)
Expected payments for costs to be incurred in connection with the adjustment and recording of losses. Can be classified into two broad categories: Defense and Cost Containment (DCC) and Adjusting and Other (AO). Can also be separated into Allocated Loss Adjustment Expense and Unallocated Loss Adjustment Expense for ratemaking purposes.
Loss Reserve
The amount that insurers set aside to cover claims incurred but not yet paid.
Multi-Peril Insurance
Personal and business property coverage combining several types of property insurance in one policy.
Occurrence‑Based Policy
A policy that covers losses occurring during the policy period, regardless of when the claim is reported.
PD (Property Damage)
Physical damage to insured property.
PEL (Policy Exposed Limit)
The portion of a policy’s limit that is actually exposed to loss, after accounting for deductibles, sub‑limits, and coverage terms.
Peril
The cause of property damage or personal injury, origin of desire for insurance. “Cause of Loss”
PML (Probable Maximum Loss)
An estimate of the largest loss likely to result from a single event.
Policy Limit
The maximum payable amount under an insurance policy.
Portfolio
A collection of insurance policies or risks grouped together, typically managed or analyzed by an insurer or underwriter as a single book of business.
Premium
The amount paid to an insurer to maintain coverage.
Rate / Rating
The method used to calculate insurance premiums based on risk factors.
Reinsurance
Insurance purchased by insurers to transfer portions of their risk to another insurer.
Replacement Cost (RC)
The cost to replace damaged property with new property of similar kind and quality, without depreciation.
Retention (Self‑Insured Retention, SIR)
The amount of loss the insured retains before insurance coverage applies.
Risk Appetite
The level and type of risk an insurer is willing to accept.
Schedule
A detailed listing of insured locations, properties, or assets. In SpatialKey, a schedule typically refers to a list of new risks that an underwriter is reviewing for potential coverage.
Sub‑Limit
A lower limit applying to a specific type of coverage within a policy.
Treaty Reinsurance
Reinsurance that covers a defined portfolio or class of business.
TIV (Total Insured Value)
The total value of insured assets, typically including buildings, contents, and business interruption.
Underwriting
The process of evaluating risk and determining policy terms and pricing.
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