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Actual Damages The loss actually sustained by a plaintiff for which compensation is sought.

Association with Local Counsel/Admission Pro Hac Vice A procedure allowing an out-of-state attorney to associate with and appear in a specific legal action. It requires association by the out-of-state attorney with in-state counsel. No admission to the State Bar is required by the out-of-state attorney for that one case.

Attorney/Client Confidentiality The privilege that protects communications between an attorney and a client or a potential client. A person need not have actually retained the attorney in order for the privilege to exist. It may exist where a person speaks to an attorney to obtain advice or to determine if that attorney is one that the client might wish to retain.

Bad Faith Actions An “action” is another name for a lawsuit. A bad faith action (lawsuit) is one that alleges that the insurer has breached the implied duty of good faith and fair dealing and has acted unreasonably in the investigation or payment of a claim.

Breach A legal term meaning to break or violate. Where an insurer has not honored its obligation to act reasonably towards its insured, it may be said to have “breached” the duty of good faith.

Breach of Contract A failure to perform any promise which forms all or part of a contract.

Burden of Proof The requirement of establishing at trial the truth of a given proposition or claim by such an amount of evidence as the law may require (e.g., more probable than not, clear and convincing).

Causation The legal requirement that an act produce an injury or help to produce an injury and if the injury would not have happened without the act.

Clear and Convincing Evidence A standard of proof, which requires showing that something is more than probably true and less than true beyond a reasonable doubt. A party who has the burden of proof by clear and convincing evidence must persuade the jury that the claim is “highly probable.”

Commercial General Liability A form of liability insurance sold to businesses and commercial entities. Commercial general liability policies often include various types of coverages under one broad form policy, including automobile liability, premises liability, director’s and officer’s liability and so on.

Consumer Fraud A term used to describe deceptive or unfair trade practices. In insurance, it usually refers to some aspect of marketing and selling an insurance policy to consumers, which does not deliver the protections promised. Most states have consumer fraud statutes.

Damages The legal term that means, generally, the losses suffered by one who claims to have been injured by another. These losses or “damages” can include economic losses, compensation for physical injuries and pain and suffering.

Declaratory Actions An action (lawsuit) which conclusively declares the rights and duties of the parties. Where a party is uncertain of his legal rights or obligations, he may seek a “declaration” from the court as to what they are.

Disability Insurance A form of insurance that replaces income by one who becomes disabled. These policies take, at least, two basic forms: disability from a person’s own or regular occupation and disability from any occupation for which the insured may be suited by training and experience.

Evil Mind A legal term of art used to describe the mental state of one against whom punitive damages are sought. An evil mind can be evidenced by an intent to harm or by a conscious disregard for the harm which a person’s conduct may cause.

Excess Judgment A binding legal judgment (award) against an insured whose liability policy provides coverage limits less than the amount of the judgment. An insured may have his personal assets thus exposed where there is a judgment in excess of policy limits.

First-Party Claims These are claims for benefits by an insured under a policy with his insurer. Examples of first-party claims include claims for uninsured motorist benefits, property damage claims, underinsured motorist claims, disability income claims and health insurance claims.

General Damages A type of injury or loss that cannot be calculated. These types of damages cover a host of non-economic losses such as pain and suffering.

Health Insurance A form of insurance which provides for payment of medical and health costs incurred by an insured.

Homeowners’ Insurance A form of insurance that provides liability protection, exclusive of automobile liability, and protection against types of accidental property loss or damage to an insured’s premises or its contents. Homeowners’ insurance can provide broad protection against a number of negligence claims against an insured under a homeowners’ policy. The protection of this insurance is not limited to claims occurring on or arising out of the homeowners’ premises.

Implied Duty of Good Faith and Fair Dealing The obligation imposed by law upon insurers to conduct themselves reasonably in the investigation and payment of claims to its insured. This obligation is implied in every insurance contract.

Indemnify To protect against future loss or damage. Liability insurance policies purport to “indemnify” insureds for losses or damages they may sustain when a claim is made against them by another for their own negligence.

Insured The person or party who has purchased the insurance policy or is insured by it under its terms.

Insurer The entity that agrees to supply the protections afforded by the insurance policy, i.e., the insurance company.

Liability Insurance A form of insurance, which provides protection to persons for claims, made against them. Usually, these homeowners and auto insurance policies protect a person from claims for negligence or malfeasance.

Life Insurance A form of insurance, which pays a stated benefit upon the death of the insured. Such policies typically exclude, however, death by suicide.

Medical Payments Insurance A form of insurance coverage guaranteeing the payment of reasonable and necessary medical bills. Payment is triggered when an event or accident causes an injury for which treatment is necessitated. This type of benefit is paid irrespective of fault.

Negligence The legal term used to define fault. It amounts to the failure to use reasonable care. It may consist of action or inaction. It is the failure to act as a reasonably careful person would under the circumstances.

Punitive Damages A type of legal damages in addition to actual or general damages. These types of damages are designed to punish defendants and deter them and others from similar misconduct in the future. They are not designed to compensate the plaintiff but to punish the defendant and, thus, to make an “example” of him.

Consequently, they are sometimes called “exemplary damages.”
Reasonable Basis That conduct which a reasonable person would engage in based upon the facts known to him for the conduct or action taken.

Reasonable Expectations A legal doctrine, which allows an unwritten term to become part of the contract. It may arise where an insurer or its agent has made representations about what coverages are being purchased or will be provided even though the insurance policy does not provide such coverage.

State of Mind What one was thinking or intending. The “state of mind” of the defendant is always at issue in a case where punitive damages are being claimed. In such a case, the defendant’s state of mind must be evil, harmful or disregardful of injury to other persons.
Third-Party Claims A claim made against an insured under a liability policy. The person making the claim is not the insured and is a “third-party” to the insurance contract. An example of a third-party claim is where an injured motorist makes a claim against the insurance policy of the person causing him injury.

Underinsured Motorists Insurance A form of insurance designed to compensate an insured, under an automobile policy, for damages or injuries suffered by him, which cannot be adequately paid for under the automobile insurance of the party at fault. This is extra protection, which insureds buy in order to provide added security against drivers who carry too little liability insurance. It is a form of first-party coverage.

Uninsured Motorists Insurance A form of insurance designed to protect an insured, under an automobile policy, from injuries or damages not covered by any automobile insurance on the part of the person or persons at fault. This provides additional protection against those persons who have no insurance. It is also a first-party coverage.

Worker’s Compensation Insurance A form of insurance provided and usually required to be provided by employers to protect employees from on-the-job injuries. A person injured while in the course and scope of his employment may have a claim for worker’s compensation benefits under his employer’s policy. These types of benefits are regulated by statutes in every state.

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