Actual cash value - the amount of reimbursement based on the current market value of an item, allowing for depreciation
All risk policy - type of coverage for any event except those specifically named as exclusions
Average replacement cost - average cost for all holdings or groups of holdings
Blanket coverage - insurance written to cover all items
Coinsurance - a clause in insurance policies to protect the carrier by limiting the amount of reimbursement when inadequate coverage is held
Direct loss - a financial loss that results from the physical damage, destruction, or theft of the property
Disaster - a serious disruption of the functioning of an institution causing widespread material and economic losses that exceed the ability of the affected institution to cope using its own resources
Emergency - an unforeseen urgent situation that calls for immediate action
Fine arts - paintings; works of art on paper; tapestries; rare or art glass; art glass windows; valuable rugs; statuary; sculptures; antique furniture; antique jewelry; bric-a-brac; porcelains; and similar property of rarity, historical value, or artistic merit excluding automobiles, watercraft, aircraft, coins, stamps, money securities, furs, jewelry, precious metals
Hazard - a potentially damaging physical event, phenomenon, or human activity that increases either the frequency or the severity of losses (e.g., poor lighting does not cause loss, but it is a hazard as it can promote theft)
Indirect loss - a financial loss that results indirectly from the occurrence of a direct physical damage or theft loss
Insurance - a financial arrangement that redistributes the costs of unexpected losses by transferring the cost of the predicted losses back to the exposures. Legally it is a contractual arrangement whereby one party agrees to compensate another party for losses.
Insurance Contract (Basic Parts of:)
- Conditions are provisions inserted in the policy that qualify or place limitation on the insurer's promise to perform; i.e. file a claim.
- Declarations are statements that provide information about the property to be insured.
- Deductible is a provision by which a specified amount is deducted from the total loss payment that otherwise would be payable.
- Endorsements and riders are written provisions that add to, delete, or modify the provisions in the original contract.
- Exclusions are excluded perils, excluded losses, excluded property.
- Insuring agreement summarizes the major promises of the insurer.
- Miscellaneous provisions establish working procedures for carrying out the terms of the contract.
Named peril - insurance that specifics what hazards are being insured against
Peril - the cause of loss
Preparedness - activities and measures taken in advance to ensure effective response to the impact of realized hazards
Prevention - activities to provide outright avoidance of hazards and loss
Recovery - decisions and actions taken after a disaster with a view to returning to pre-disaster operations while undertaking the necessary adjustments to reduce future risk
Replacement - the real cost of replacing or restoring an item in the current market
Response - intervention during or immediately after a disaster to stabilize conditions
Risk - the probability of harmful consequences or expected losses resulting from the interaction between hazards and vulnerabile conditions (Risk = Hazard x Vulnerability)
Risk management - the systematic process of using administrative decisions, organization, operational skills and capacities to implement policies, strategies, and coping capacities to lessen the impacts of realized hazards, comprising all activities, including structural and non-structural measures to avoid (prevention) or to limit (mitigation and preparedness) adverse effects of realized hazards
Scheduled limit - the specified limit for insured to receive full value after a loss. SChedule requires description of property and its appraised value
Self-insurance - a funding vehicle to handle any losses by the organization itself, rather than through the purchase of commercial insurance
Specific coverage - insurance that names coverage in a specific category or location
Valuable papers and records - written, printed or otherwise inscribed documents and records, including but not limited to books, maps, films, drawings, abstracts, deeds, mortgages, micro-inscribed documents, and manuscripts, but does not include money and/or securities, or electronic processing media
Valuable papers and records coverage - covers the cost of reconstructing the damaged or destroyed records and should cover restoration since in many cases repurchase is not possible
Vulnerability - the conditions determined by physical, economic, environmental factors or processes that increase the susceptibility of an institution to the impact of realized hazards
Definitions from Charles M. Nyce, Foundations of risk management and insurance (American Institute for Chartered Property Casualty Underwriters/Insurance Institute of America, Malvern, PA, 2006) and from Disaster Risk Reduction (University of Wisconsin-Madison Disaster Management Center, July 2009).