Common Insurance and Legal Terms

ABANDONMENT: Leave or give up a duty owed to another.

ACCIDENT: Unforeseen and unintended event or occurrence.

ACCREDITATION: A credential given to an agency or institution upon meeting a certain set of standards.

ACTUARY: A person trained in the mathematics of insurance such as the calculation of premiums, reserves, life expectancy and other values.

ADMINISTRATIVE LAW: The law created by administrative agencies of government. For example, laws made by the state boards of nursing.

ADMINISTRATOR: Companies responsible for issuing insurance policies, billing and collecting premiums, providing customer service and marketing insurance programs. For example, Maginnis and Associates, a Division of Kirke-Van Orsdel, Inc. is an insurance administrator.

ADVANCED DIRECTIVES: Instructions and desires regarding health care treatment stated by a competent adult. These instructions can be issued through spoken word, power of attorney, living will, or trust agreement.

AFFIDAVIT: Voluntary oral or written statement of facts, which a person swears to be true before an official authorized to administer an oath.

AGGREGATE: The greatest amount recoverable on account of a single loss or during a policy period, or on a single project.

ALLEGATION: An unproved charge or assertion.

APPEAL: An appeal to a higher authority, e.g. a superior court, to reverse or correct a judgment of a lower authority such as a court or administrative agency.

ARBITRATION: The settlement of disputed questions, whether of fact or law, by a neutral third party whose decision may be binding or non-binding.

ASSAULT: A threat to harm another person physically, or an unsuccessful attempt to do so. Differs from battery in that no physical contact is made.

BATTERY: An offensive, intentional, unconsented-to-touching of a person.

BODILY INJURY: Physical injury to a person.

BORROWED-SERVANT RULE: A generally accepted principle that the negligent behavior of an employee who is temporarily under the control of another, becomes the responsibility of the persona who was temporarily in control. For example, a physician in an operating room could be held accountable for the negligence of a circulating nurse, even though the nurse might be employed by the hospital.

CAPTAIN-OF-THE-SHIP DOCTRINE: A doctrine by which the person in charge, the one who makes the final decision, may be held responsible for the acts of those under his or her supervision.

CASE LAW: Decisions of the courts.

CERTIFICATION: A credential awarded by a professional society of a person, e.g. a registered nurse upon the meeting of certain requirements such as an examination and a specified number of years in practice.

CIVIL LAW: The part of the law which is concerned with the legal rights and duties of private persons.

CIVIL WRONG: Contrasts with a criminal wrong in that it includes those actions that inflict damage to another person or the other person's property without criminal intent. Such actions might include automobile accidents, one's dog biting a non-resident person, one's negligence causing harm or damage to another person.

CLAIMS-MADE POLICY: An insurance policy that covers an insured for claims made against the insured during the current policy period. "Tail" coverage may be purchased for protection after the original policy period has ended. (See also tail.)

COMMON LAW: Common law is based on generally accepted customs, practices, procedures, and usage of a people, and which usually is accepted by courts of law as being enforceable. Generally, such law is established by judges who refer to such principles as federal, state, and local legislative bodies. Occasionally, such law also is called ordinance law.

COMPENSATORY DAMAGES: Amounts of money awarded for proven loss.

COMPETENCY: Determination of the ability to give a level of care according to a predetermined set of standards or law.

COMPLAINT: A document that sets forth the act or reason for a lawsuit; identifies the plaintiff(s) and defendant(s) in the suit.

CONSENT: A voluntary act by which one person agrees to allow someone else to do something. For medical liability purposes, consents should be in writing with an explanation of the procedures to be performed.

CONTRACT: A legally enforceable agreement between two parties in which each agrees to do something.

CONTRIBUTORY NEGLIGENCE: The act or failure to act by a person that contributes to the injury of another. For example, if a hospitalized patient were to injure himself or herself because the attending nurse failed to apply appropriate restraints, the nurse could be held accountable for having contributed to the injury.

CORPORATE NEGLIGENCE: The failure of a hospital or other health care facility, to fulfill its responsibilities to exercise safeguards that would protect against injuries to patients or staff.

CREDENTIALING: A form of recognition that a person or entity has met certain predetermined requirements. For example, a license is a credential awarded by a state licensing board. Certification is a credential awarded to an individual by a professional society. Accreditation is a credential awarded to an agency.

CRIMINAL LAW: That area of the law dealing with criminal statues.

DAMAGES: A sum of money awarded by a court for an injury caused by the act of another. Damages may be actual compensatory (equal to the amount of loss shown); exemplary or punitive (in excess of the actual loss, and assessed to punish the person for the malicious conduct which caused the injury), or nominal (less than actual loss, often a trivial amount because of the injury is slight or because the exact amount of injury has not been determined.)

DEFAMATION: Injury to a person's reputation caused by another person making willful and malicious statements about him to a third person. Such defamation can include libel (the written form), or slander (the oral form).

DEFENDANT: The person or entity being sued.

DEPOSITION: Pretrial statements of a witness under oath, taken in question-and-answer format as if it were in court.

DOCTRINE: A rule, regulation, belief, tenet, practice, or principle that may be ascribed to. It may be a concept derived from a law or the interpretation of a law.

DUE CARE: The legal duty one owes to another according to the circumstances.

ETHICS: Standards on conduct or moral views about what is right or wrong, good or bad.

EVIDENCE: Includes testimony of witnesses, introduction of records, documents, exhibits, objects or any other matter which may be offered in a court setting for the purpose of proving or disproving a given fact or contention.

EXCLUSION: Matters not covered by an insurance policy.

EXPERT WITNESS: A witness having special knowledge of the subject about which she or he is to testify. The witness helps judge or jury understand Codes of Conduct, Standards of Care and accepted professional practices.

EXPIRATION: The date upon which an insurance policy terminates unless continued or renewed by paying an additional premium.

FELONY: A crime more serious than a misdemeanor and for which punishment can range from imprisonment to death.

FRAUD: An intentional act or statement that deceptively causes another persona to give up property or some lawful right.

GOOD FAITH: Being faithful to one's duty or obligation. An honest and sincere intention to fulfill one's responsibility, contract, or agreement.

GOOD SAMARITAN LAW: A state law that provides civil immunity from negligence lawsuits for individuals who stop and render care in an emergency. This doctrine is not recognized in all states.

INFORMED CONSENT: A doctrine that states that before a patient is asked to consent to a risky or invasive diagnostic or treatment procedure, he or she is entitled to receive certain information: (a) a description of the procedure; (b) any alternatives to the procedure and related risks; (c) the risk of death or serious bodily disability from the procedure; (d) the probable results of the procedure, including any problems of recuperation and time of recuperation anticipated; and (e) anything else that generally is disclosed to patients asked to consent to the procedure. It should be noted that the requirement is a disclosure one only, similar to a bank disclosure or a Miranda warning, and in therapeutic setting most courts do not require a showing that the patient actually understood the disclosures only that they were made at a time and in a manner in which that patient could have understood them, e.g. that patient was not under the influence of drugs and the disclosures were in lay terms.

INSURANCE COMPANY: A company which takes risks on behalf of the insured.

INSURANCE POLICY: A contract for transferring risk to an insurance company or similar entity which pools a large number of similar insured in order to reduce each one's overall risk. In return for a premium, the insurance company will pay for certain acts or injuries caused by the insured. Many policies also cover other expenses such as cost of defense.

INSURED: The person to whom an insurance policy is issued.

INTENT: Acting to achieve a specific outcome.

JUDGMENT: The decision of a court or the reason for such decisions.

LIABILITY: The obligation of one party to another. The finding is usually imposed by a court and generally results from a finding of negligence.

LICENSURE: Permission given by a state government to practice an activity such as nursing. The activity is regulated or controlled by a state agency such as a state board of nursing.

LIMITS OF COVERAGE: The maximum dollar value of claims that will be paid under an insurance policy. For professional liability, there is a maximum amount for each claims and an annual aggregate amount that will be paid from all claims under that policy in a given year. For example, a $1,000,000/$3,000,000 policy allows for coverage of 1 million dollars per incident and a maximum amount of 3 million dollars per year.

MALPRACTICE: Professional negligence. Liability arising from improper practice of a profession; usually imposed when one has not met the standards of care required in that profession, resulting in harm to another.

MEDIATION: The process of resolving differences between two or more parties through the use of a neutral third party. Recommendations of the mediator are usually advisory and not binding upon the parties.

MISREPRESENATTON: A misstatement. (If done with the intention to mislead, it may void a policy of insurance).

NAMED INSURED: The person named in the policy to receive coverage. The covered person is then known as the party of the "first part." The insurance company is the "second part." Liability claims against the insured and the insurer are made by "third" parties.

NATIONAL PRACTITIONER DATA BANK: A data bank created by the U.S. Congress for the collection of information on medical malpractice awards; adverse licensure actions; adverse clinical privilege actions and adverse professional society membership actions.

NEGLIGENCE: Failure to act as a reasonable, prudent person in the protection/care of another. Failure to meet the standard of care.

OCCURRENCE POLICY: An insurance policy that provides coverage for a claim that occurred during the policy period even if the claim is made after the policy period has ended.

PERJURY: Giving false testimony under oath.

PLAINTIFF: The person who brings a lawsuit against another who is called the defendant.

PLEADINGS: The technical means by which parties to a dispute frame the issue for the court. The plaintiff's complaint or declaration is followed by the defendant's answer; subsequent papers are filed as needed.

PREMIUM: The amount of money paid to the insurance company in exchange for the insurance protection provided.

PREMIUM PERIOD: The length of time covered by the premium, usually identical with the policy period.

PRESCRIPTIVE AUTHORITY: Permission to prescribe or dispense medication.

PROXIMATE CAUSE: The act or happening that is directly responsible for an injury. In criminal and tort law, one' liability with respect to a given injury generally is limited to results proximately caused by the conduct or omission.

PUNITIVE DAMAGES: An amount awarded to a plaintiff, over and above actual damages, to punish the negligent party.

RES IPSA LOQUITUR: "The thing speaks for itself." A situation or happening that is self-evident. The event may include occurrences that do not ordinarily happen without negligence; the occurrence must have been caused by an object or instrument in the exclusive control of the person who inflicted the injury, and the occurrence must not have been caused in any part by the victim. Generally, there is at least an element of negligence involved.

RESPONDEAT SUPERIOR: "Let the master answer." Legal doctrine that imposes liability upon the employer for the results of negligent acts of employees acting within the scope of their employment.

RISK: The chance of loss. The greater the range of possible outcomes, the greater the risk.

RISK MANAGEMENT: A managed program or effort directed at reducing risk, avoiding accidents, and making effective use of purchased insurance.

RISK RETENTION GROUP: Persons or organizations who combine to share a part of their risks. The group may purchase insurance as a group above the retained amounts.

RULES AND REGULATIONS: Statements or guidelines having the force of law that are issued by a state agency such as the board of nursing to interpret a statute such as the nurse practice act. Rules and regulations can also be issued by a hospital or other work setting to guide the work of employees.

SCOPE OF PRACTICE: A range of activities, actions or requirements set by law or recognized by a profession as the domain of practice.

SPECIAL DAMAGES: These damages must be pleaded and proved apart from the original suit. For example, as the result of an injury, the victim also suffers loss of income which he or she believes there is a reasonable right to receive. In a separate action, the victim may bring suit against the defendant in an effort to recover such loss of income. Special damages might also be referred to as consequential damages.

STANDARD OF CARE: The "norm" for practice. Standards derive from the federal and state law, professional associations and policies of employing agencies. Standards may also arise from usual and customary practice.

STATUTE: A law enacted by Congress or a state legislature.

STATUTE OF LIMITATIONS: A legal limit on time allowed for filing suit in civil matters. Usually measured from the time of the wrong or from the time when a reasonable person would have discovered the wrong.

SUBPOENA: A court order compelling a witness to appear and testify in a certain proceeding.

SUIT/LAWSUIT: As a rule, an action in a civil court. A civil action usually involves private parties seeking redress against each other. By contrast, a criminal proceeding involves the state or government taking action against a person or organization.

SUMMONS: A notice delivered by a sheriff or other authorized person informing a person that he or she is a defendant in a civil action and telling the person when and where to appear in court to present his/her side.

TAIL: An extension of a insurance policy period. (See also claims made policy).

TERM: The length of time covered by a policy or a premium.

TORT: A civil wrong, in contrast to a criminal act, involving injury or damage to another party (not involving a breach of contact), for which the victim can sue for redress. It may include negligence liability.

UNDERWRITER: Refers to (a) an insurance company which takes the risk, or (b) the individual company employee who makes the decision about whether to insure an applicant. Sometimes the term is used to refer to life insurance agents.

UNDERWRITING: The process used by an insurance company to determine whether an on what basis it will accept an application for insurance.

VERACITY: The truth. A principle that requires a healthcare provider to tell the truth and not mislead a court, insurer, patient or other.

WARRANT: Authorization for a person to be taken into custody or arrested.

WRONGFUL DEATH: A type of lawsuit brought on behalf of a deceased person's beneficiaries that alleges that death was attributable to the willful or negligent act of another.

Adapted with permission from Myers, K. & Fergusson, P. (1989). Nurse At Risk. Des Moines: Health-Pro and Kirke-Van Orsdel, Inc.