Insurance Glossary: B

Question: What is Bad Faith?

Answer: Bad faith is an allegation that an insurer has failed to settle a claim within its policy limits when the opportunity existed or has dealt with another party without regard to fairness or reasonableness.  Also refers to a complaint filed to insurance regulators or a suit based on an insurer’s improper actions during a claim.

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Question: What is a Bailee?

Answer: A bailee is a person who has taken temporary possession of goods belonging to others, usually in order to perform a service such as cleaning, restoring, repairing, or storing.

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Question: What is Bailee Customers Insurance?

Answer: Bailee customers insurance arranged by a bailee. An example is the insuring of furs in a storage warehouse arranged by the warehouse for the benefit of their customers.

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Question: What is Basic Death Benefit?

Answer: A basic death benefit is the total amount provided through a life insurance policy. This does not include coverage from additional death and dismemberment, decreasing term policies, or other insurance riders.

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Question: What is a Beneficiary?

Answer: In a life insurance policy, a beneficiary is the person named to receive the benefits after the insured dies.

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Question: What is a Benefit Formula?

Answer: In a retirement plan, the benefit formula is used to determine payment amounts to the insured or beneficiary.

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Question: What is a Benefit Schedule?

Answer: A benefit schedule is a health care insurance document that lists the items and services the policy covers. It also notes the limits paid by the insurance company in the event of accidents, illnesses, surgery, and hospital stays.

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Question: What are Benefits?

Answer: Benefits are the money or services available within a life, health, or accident insurance policy.

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Best’s Rating

Best’s rating refers to a letter and numerical grade assigned by the A.M. Best Company, a rating and financial information provider.

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Question: What is the Best’s Rating?

Answer: Refers to a letter and numerical grade assigned by the A.M. Best Company, a rating and financial information provider.

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Question: What is a Bicycle Floater?

Answer: A bicycle floater is inland marine insurance coverage for high-value bicycles. This can be obtained either through a bicycle dealer who provides certificates from a master policy or through a floater on personal insurance.

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Question: What is a Binder?

Answer: A binder is an oral or written agreement to provide insurance. Usually provides evidence of coverage prior to the issuance of a policy.  Often considered to be a temporary insurance policy until the actual policy has been issued.

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Question: What is Binding Authority?

Answer: Binding authority is an agent’s legal and usually contractual right to create an insurance contract for an insurance company they represent. Binding authorities normally have a specific scope in amount and kind of coverage.

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Question: What is a Blue Cross plan?

Answer: A healthcare service prepayment organization. It is non-profit, tax-exempt, and provides services instead of indemnity benefits. A Blue Cross plan pays the hospital for the services based on previously agreed to costs rather than charges. This is separate from the national organization called Blue Cross Association.

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Question: What is a Blue Shield plan?

Answer: A healthcare plan which is separate from Blue Cross. A Blue Shield plan pays for hospital expenses while Blue Cross pays for doctor visits and other medical expenses.

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Question: What is Bobtail Coverage?

Answer: Bobtail coverage is auto liability insurance protecting against losses while semi-tractors are being operated without a trailer.

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Question: What is Bodily Injury?

Answer: Bodily injury is an injury, sickness, or disease, resulting from an accident . . . including death.

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Question: What is Bodily Injury Liability Insurance?

Answer: Bodily injury liability insurance is a form of protection covering the insured’s legal liability for bodily injury to others caused by the insured’s failure to act responsibly.

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Question: What is a Bond?

Answer: A bond may refer to more than one type. An insurance bond is a contract whereby one party guarantees the performance of a second party to a third party. See Bond-fidelity and Bond-surety for additional definitions.

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Question: What is a Bond-fidelity?

Answer: A bond-fidelity is a type of insurance bond that provides an employer compensation in incidents of employee theft or embezzlement.

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Question: What is a Bond-surety?

Answer: Bond-surety is a type of insurance bond which serves as an agreement between three parties. The surety (first party) provides obligations to the beneficiary (second party) in the event of a default of the principal (third party).

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Question: What is Broadform?

Answer: Broadform is a homeowners’ form which covers the same causes of loss as the basic form, but also includes six additional causes of loss.

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Question: What is a Broker?

Answer: A broker is a licensed, legal representative of the insured who negotiates with underwriters on behalf of the insured. In some states the broker may receive a commission from the insurance company as well as a fee from the insured.

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Question: What is a Broker-Agent?

Answer: A broker-agent may operate both as brokers representing the policyholder and as agents representing the company. They may also have an office in one city, which operates strictly on a brokerage basis, while in another city strictly work as agents.

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Question: What is Builder’s Risk?

Answer: Builder’s risk is a special property form dealing with the unique loss exposure of property while under construction/renovation.

For a broader discussion of builder’s risk insurance.

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Question: What is a Building and Personal Property Coverage Form?

Answer: A building and personal property coverage form is insurance used to cover buildings, business personal property, and personal property of others.

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Question: What is Building Rate?

Answer: A building rate is for fire insurance on a building, and can be expressed per $100.00 of coverage. There is also a separate rate for insurance on that building’s contents.

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Question: What is Burglary?

Answer: Burglary is the felony of breaking and entering into a home or business with the intent to steal or actual stealing of items. Visible signs of forced entry must exist.

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Question: What is a Business Auto Policy?

Answer: A business auto policy is meant to provide coverage for insuring commercial vehicles, rather than private passenger cars.

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Question: What is Business Income Insurance?

Answer: Business income insurance is a policy that pays for loss of earnings or income when a business is interrupted, stopped, or suspended due to an insured property loss. Loss of rents and rental value are also covered.  Extra expenses incurred to continue operations at another location are included as long as they reduce the total amount of loss.

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Question: What is Business Interruption Insurance?

Answer: Business interruption insurance covers losses if a business has to suspend or slow operations as a result of property damage. It may protect against profits, fixed costs, and extra expenses. This type of coverage is no longer available to consumers. Options now include more comprehensive and generic business income insurance.

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Question: What is Business Personal Property?

Answer: Business personal property is portable property that is owned by an insured business entity, including but not limited to goods for sale, fixtures, equipment, machines, materials, and similar property.  Also known as content. Must be used by the business operation or held for sale to be covered.

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