Long-tail Liability
One where an injury or other harm takes time to become known and a claim may be separated from the circumstances that caused it by as many as 25 years or more. Some examples: exposure to asbestos, which sometimes results in a lung disease called asbestos; exposure to coal dust, which might cause black lung disease; or use of certain drugs that may cause cancer or birth defects. These long-tail liabilities became very expensive for many corporations in the 1970s and 1980s, also causing problems for insurers because it was unclear when the situation that gave rise to the claim happened and who should pay the claim. One theory, the MANIFESTATION/INJURY THEORY, states that the insurer is responsible whenever the disease is diagnosed. The other view, the OCCURRENCE/INJURY THEORY, states that the insurer must pay only when the person is injured.
Popular Insurance Terms
Risk incurred by the insurance company after it makes the commitment to make the loan at some future time and the borrower may not accept the loan at that time. ...
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Trade association of commercial insurance brokers whose objective is to further the interests of these brokers through education, lobbying, and adherence to professional ethics. ...
Paid-in surplus, revaluation surplus, and donated surplus. This surplus includes all sources of surplus with the exception of earned surplus. ...
Extremely aggressive behavior by an insurance agent to convince a prospect to purchase the insurance product without due regard for the prospect's ability to pay the premiums and/or needs ...
Risk-creating device as compared with insurance, which is a risk-reducing or -eliminating device. This is a form of speculative risk. ...
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Tables used to determine the present value of a sum in the future by taking into consideration the assumed interest rate and time period involved. ...
Cost of replacing damaged or destroyed property with comparable new property, minus depreciation and obsolescence. For example, a 10-year-old living room sofa will not be replaced at ...
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