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RPLU 03 terms

Aggregate Limit

The maximum amount an Insurer will pay for all losses during the policy period; also known as a policy aggregate.


Determination of the amount of insured versus uninsured losses or parties.


Also reffered to as endorsement or rider.

Anti-stacking provision

Policy language that ties all claims related to one wrongful act back to the policy in effect at the time the first claim was made; it restricts the Insured to the limits applicable under the policy in effect at the time the claim was first made.

Application severability

Condition that limits the impact of breaches on an application representation to culpable Insureds; protects innocent Insureds from the actions of culpable Insureds.

Awareness provision

Policy provision that allows an Insured to report circumstances they believe will give rise to a future claim. If the notice complies with the policy terms, any future claim will be covered under the policy in effect at the time the circumstance was reported; also known as notice of potential claim or circumstance.

Bi-lateral extended reporting period

Extended reporting period that is offered when either the Insurer or Insured cancels or doesn't renew a policy; AKA a two-way ERP

Base rate

Rater per unit of insurance, based on criteria specific to a particular line of coverage; a component of a PLI rating plan used to determine PLI premiums.

Broad Form Nuclear Exclusion

An exclusion attached to an insurance policy that excludes exposures related to nuclear energy.


An allegation and demand for some kind of relief, such as money or services. A claim is defined in each policy and varies by policy.

Claims-made policy

Insurance policy that is triggered by the making of a claim against an Insured during the policy period.

Claims-made and reported policy

Policy that requires the claim to be first made within the policy period and reported to the Insurer within a designated reporting period.

Claims reporting

Insured's notification to the Insurer of a claim made against them.

Commercial General Liability Insurance (CGL)

Insurance policy that provides coverage for the general liability exposures related to operating a business; AKA "slip and fall insurance"


A component of an insurance policy that limits or qualifies an Insurer's promises.

Consent-to-settlement provision

Policy language that allows the Insured the right to approve settlements.

Contractual breach

Violation of a contract, potentially resulting in damages that may or may not be insured under PLI policy.

Coverage form

Heart of the insurance policy; includes insuring agreement, definitions, limits, and exclusions that define policy coverage.

Dec Page

The declarations page of an insurance policy; usually sets forth basic information, including name of the Insured, policy period, policy limits and premium.


Portion of the insured's loss or damages that must be paid before the insurer has any duty to indemnify.

Defense-only provision

Policy language in which the Insurer provides coverage for defense but not for damages.


A component of an insurance policy that explains the special meanings of certain words used in the policy.

Discovery period

Extension of coverage to allow claims to be made and reported during a specfied period following the end of the policy period, also known sometimes as the extended reporting period or tail period, provided the claims are based on wrongful acts that occurred before the end of the policy period and after any retroactive date.

Duty of care

A legal obligation to exercise a reasonable degree of care while rendering professional services so as to protect others from harm.

Duty to defend provision

Policy language that states that the Insurer will defend a claim against the Insured for a wrongful act.

Employment Practices Liability Insurance (EPLI)

Liability insurance coverage for claims related to employment in the workplace, such as sexual harassment, wrongful termination, and discrimination.


Written form attached to an insurance policy that changes or adds to coverage terms or conditions, and is often known as a rider or amendment.

Escape other insurance clause

One way a policy responds when other insurance covers the same liss. The escape clause excludes coverage if any other insurance also covers the same loss.

Excess other insurance clause

One way a policy responds when other insurance covers the same loss. With this type of wording the policy responds in excess of other applicable insurance.


A section of an insurance policy that describes specific exposures or types of property or activities that the policy is not intended to cover.

Exclusion severability

Condition that prevents an exclusion from being applied against an Insured based on the conduct of another Insured who triggers the exclusion; protects innocent Insureds from the actions of culpable ones.

Expert witness

A professional with a degree of skill or expertise in a particular subject.

First dollar defense

Provision under which the Insurer provides a defense for a claim against the Insured without the Insured first meeting a deductible.

Hammer clause

Nickname for policy provision that limits coverage in the event an Insured does not accept a recommended settlement offer; AKA a settlement-opportunity clause.


Insurance company's action to compensate an Insured for a covered loss, based on the terms of the insurance policy.


Principle under which an insurance company protects and compensates an Insured against the financial consequences of a covered loss.

Independent contractor

A person hired to do work for another person or business, but who is not an Employee of that person or business.

Insuring agreement

A component of an insurance policy that describes coverage provided by the Insurer, subject to limitations, exclusions, and conditions.

Interrelated claims

All claims that arise from one or a series of related acts; also known as related claims.

Laundry listing

Practice in which an Insured notifies the Insurer of a lengthy list of possible situations or claims that could lead to a claim, even though no claims has been received.


Maximum amount that will be paid by an Insurer for a covered loss.

Locality standard or rule

A mesure of the standard of care, by which a Professional is held to the standard of care of the community in which they practice.

Modification factors

One element of a PLI rating plan formula used to determine PLI premiums. Factors are based on various risk characteristics and policy limits, and are applied, in a formula, to the base rate.


A degree of fault in which a Professional fails to meet the standard of care required for his profession, causing the client to suffer some type of injury, and creating legal liability for the Professional.

Non-assignability clause

Condition that prevents an Insured from transferring coverage to another person or entity.

Non-duty to defend provision

Policy language in which the Insured defends the claim or lawsuit and the Insurer pays for defense costs.

Non-monetary relief

Legal remedy other than monetary compensation ordered by a court or agreed upon in settlement. This would include an injunction ordering a party to do or refrain from doing some act. Typically it is not covered under a PLI policy.

No participation clause

A variation of the settlement provision which allows the Insurer full contorl of settlement; the Insured has no control over settlement.

Notice of circumstance or potential claim

Same as awareness provision

Notice of claim

Policy provision which describes specific requirements for reporting a claim to the Insurer.

Notice prejudice rule

Legal principle under which an Insurer may be able to deny a claim on the grounud that the Insured did not comply with the policy's notice provision. This principle applies only if the Insurer can show that the breach of provision caused the Insurer to be harmed or prejudiced in some material way, such as by being unable to participate in a defense, resulting in a larger judgment or settlement.


An accident, including continuous or repeated exposure to substantially the same general harmful conditions.

Occurrence policy

Insurance policy that is triggered by an incident that occurs during the policy period, regardless of when the claim based on such incidents is made or reported.

Per claim limit

Max amount payable by the insurer for losses for each individual claim made during a policy period.

Predecessor organization

An organization that merged with a succesor organization. PLI may be provided depending on terms/timing of merger.

Prior Acts Coverage

Coverage for claims made during the policy period for wrongful acts that occured prior to the policy's effective date, and sometimes after a prior date known as the prior acts or retroactive date.


Legal principle that allows a claim for a contractual breach to be brough only by a party to the contractual relationship.

Pro rata basis

Method for refunding a premium when an Insurer cancels a policy, based on the number of days the policy is in effect.

Pro rata other insurance clause

Insurer pays their share of a loss based on the ratio of its applicable limits to the total applicable limits of all Insurers.

Professional Liability Insurance

Insurance that provides coverage to Professionals for liabilty claims that arise from the provision of their professional activities or services.

Pure claims made policy

Policy that covers claims made during the policy period, for wrongful acts or incidents that have happened after any applicable retroactive date.

Rating bases

One of the components of the rating plan formula used to determine PLI premiums. Rating bases vary by line of coverage and represent the unit of exposure for the insurance, to which the base rate is applied.

Rating plan

Method of determining PLI premiums using a base rate, which represents the rate per unit of insurance, and modification factors, which reflect the risk characteristics of the applicant.


Statements provided by the Applicant in the application that form the basis for underwriting and issuing an insurance contract.


An extended reporting period that allows an Insured to report claims for a period of time in the future, usually when a Professional retires or ends a practice.

Self-insured retention

The amount of loss that will be paid by the insured before their insurance becomes effective.

Separate limits

Coverages granted in addition to an applicable limit of liability.

Settling within retention clause

Variation of the settlement provision that allows the Insured to settle a claim that falls under the policy's SIR amount w/o the Insurer's approval.


Agreement in which the parties have resolved a dispute, established a decision or settlement, and have determined the rights and obligations of each party.


Condition that limits the impact of application misrepresentations and prevents the wrongful actsd of one Insured from being imputed to other Insureds.

Short-rate basis

Method for refunding premiums when an Insured cancels a policy, based on the number of days the policy was in effect, less 10%

Standard of care

Degree of care a reasonable member of the profession would exhibit, with similar skills and in similar circumstances. The standard of care is the benchmark against which a Professional's conduct is judged.

Statutory violation

Violation of a state or federal statutory law, as opposed to common or judge made law.

Straight-hammer clause

Variation of a settlement opportunity or hammer clause that is most favorable to the Insurer and requires the Insured to pay for all defense costs and damages that exceed the recommended settlement offer.

Supplemental payments

Payments made for additional expenses related to damages or defense, usually paid in addition to the limits of liability.

Sub limits

Coverages granted within the limits of liability.

Unconditional settlement clause

Variation of the settlement provision that allows the Insured control of settlement.

Unilateral extended reporting period (ERP)

Extended reporting period only offered when the Insurer cancels or doesn't renew a policy; AKA a one-way ERP

Velvet-hammer clause

Variation of the settlement-opportunity or hammer clause that is more favorable to the Insured and requires the Insured to pay a smaller portion or percentage of the defense costs and damages that exceed the recommended settlement offer.


Statement in an application, signed by Applicant, affirming that the information they provided on the application is truthful and accurate.

Wrongful acts

Errors, omissions, or negligent acts that are committed by a Professional during the provision of professional services. Wrongful acts will be defined by the policy.

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