GLOSSARY

RATE The cost of a unit of insurance, usually per $1,000. Rates are based on historical loss experience for similar risks and may be regulated by state insurance offices.

RATE REGULATION The process by which states monitor insurance companies’ rate changes, done either through prior approval or open competition models. (See Open competition states; Prior approval states)

RATING AGENCIES Six major credit agencies determine insurers’ financial strength and viability to meet claims obligations. They are A.M. Best Co.; Duff & Phelps Inc.; Fitch, Inc.; Moody’s Investors Services; Standard & Poor’s Corp.; and Weiss Ratings, Inc. Factors considered include company earnings, capital adequacy, operating leverage, liquidity, investment performance, reinsurance programs, and management ability, integrity and experience. A high financial rating is not the same as a high consumer satisfaction rating.

RATING BUREAU The insurance business is based on the spread of risk. The more widely risk is spread, the more accurately loss can be estimated. An insurance company can more accurately estimate the probability of loss on 100,000 homes than on ten. Years ago, insurers were required to use standardized forms and rates developed by rating agencies. Today, large insurers use their own statistical loss data to develop rates. But small insurers, or insurers focusing on special lines of business, with insufficiently broad loss data to make them actuarially reliable depend on pooled industry data collected by such organizations as the Insurance Services Office (ISO) which provides information to help develop rates such as estimates of future losses and loss adjustment expenses like legal defense costs.

REINSURANCE Insurance bought by insurers. A reinsurer assumes part of the risk and part of the premium originally taken by the insurer, known as the primary company. Reinsurance effectively increases an insurer's capital and therefore its capacity to sell more coverage. The business is global and some of the largest reinsurers are based abroad. Reinsurers have their own reinsurers, called retrocessionaires. Reinsurers don’t pay policyholder claims. Instead, they reimburse insurers for claims paid. (see Treaty Reinsurance, Facultative Reinsurance)

RENTERS INSURANCE A form of insurance that covers a policyholder’s belongings against perils such as fire, theft, windstorm, hail, explosion, vandalism, riots, and others. It also provides personal liability coverage for damage the policyholder or dependents cause to third parties. It also provides additional living expenses, known as loss-of-use coverage, if a policyholder must move while his or her dwelling is repaired. It also can include coverage for property improvements. Possessions can be covered for their replacement cost or the actual cash value that includes depreciation.

REPLACEMENT COST Insurance that pays the dollar amount needed to replace damaged personal property or dwelling property without deducting for depreciation but limited by the maximum dollar amount shown on the declarations page of the policy.

Replacement Cost Coverage The cost to repair or replace an insured item. Some insurance only pays the actual cash or market value of the item at the time of the loss, not what it would cost to fix or replace it. If you have personal property replacement cost coverage, your insurance will pay the full cost to repair an item or buy a new one.  

RESERVES A reinsurer assumes part of the risk and part of the premium originally taken by the insurer, known as the primary company. Reinsurance effectively increases an insurer's capital and therefore its capacity to sell more coverage. The business is global and some of the largest reinsurers are based abroad. Reinsurers have their own reinsurers, called retrocessionaires. Reinsurers don’t pay policyholder claims. Instead, they reimburse insurers for claims paid.

RESIDUAL MARKET Facilities, such as assigned risk plans and FAIR Plans, that exist to provide coverage for those who cannot get it in the regular market. Insurers doing business in a given state generally must participate in these pools. For this reason the residual market is also known as the shared market.

RETENTION The amount of risk retained by an insurance company that is not reinsured.

RETROCESSION The reinsurance bought by reinsurers to protect their financial stability.

RETROSPECTIVE RATING A method of permitting the final premium for a risk to be adjusted, subject to an agreed-upon maximum and minimum limit based on actual loss experience. It is available to large commercial insurance buyers.

RIDER An attachment to an insurance policy that alters the policy’s coverage or terms.

Risk The likelihood of a loss.

RISK-BASED CAPITAL The need for insurance companies to be capitalized according to the inherent riskiness of the type of insurance they sell. Higher-risk types of insurance, liability as opposed to property business, generally necessitate higher levels of capital.

RISK MANAGEMENT Management of the varied risks to which a business firm or association might be subject. It includes analyzing all exposures to gauge the likelihood of loss and choosing options to better manage or minimize loss. These options typically include reducing and eliminating the risk with safety measures, buying insurance, and self-insurance.

Roof Covering The covering applied to the roof deck for weather resistance, fire classification or appearance
  • Florida Building Code (FBC) Equivalent – Asphalt roof coverings installed in accordance ASTM D 3161 (modified for 110 mph) or Miami Dade County PA 107-95.
  • Non- Florida Building Code (FBC) Equivalent – Asphalt roof shingles not meeting requirements listed above for FBC Equivalent and all other roof covering types.
  • Reinforced Concrete Roof Deck - A roof structure composed of cast-in-place or pre-cast structural concrete designed to be self-supporting and integrally attached to wall/support system.

Roof Deck Attachments The material used to construct roof decks, and the methods used to attach the deck to the roof framing members can influence the likelihood of failure in high winds.
  • Attachment A – Plywood/OSB roof sheathing attached to roof trusses/rafters by 6 penny nails (2” x 0.131” diameter) or greater which are properly spaced at a maximum of 6” along the edge and 12” in the field on 24” truss/rafter spacing.

        OR
    Batten decking or Skipped decking (typically used on roof decks supporting wood shakes or wood shingles).

        OR
    Any system of screws, nails, adhesives, other roof deck fastening systems or truss/rafter spacing that has an equivalent mean uplift resistance of 55 pounds per square foot or more as evidenced by laboratory uplift tests on & full size sheets of plywood/OSB.
     
  • Attachment B – Plywood/OSB roof sheathing with a minimum thickness of 1/2" attached to roof trusses/rafters by 8 penny (2.5” x 0.131” diameter) nails or greater which are properly spaced at a maximum of 6” along the edge and 12” in the field on 24” truss/rafter spacing.

        OR
    Any system of screws, nails, adhesives, other roof deck fastening systems, or truss/rafter spacing that has an equivalent mean uplift resistance of 103 pounds per square foot or more as evidenced by laboratory uplift tests on full size sheets of plywood/OSB.
     
  • Attachment C – Plywood/OSB roof sheathing with a minimum thickness of 1/2" attached to roof trusses/rafters by 8d nails (2.5” x 0.131” diameter) which are properly spaced at a maximum of 6” along the edge and 6” in the field on 24” truss/rafter spacing.

        OR
    Dimensional Lumber or Tongue & Groove deck roof composed of ?” thick boards with nominal widths of 4” or more.

        OR
    Any system of screws, nails, adhesives, other roof deck fastening systems, or truss/rafter spacing that has an equivalent mean uplift resistance of 182 pounds per square foot or more as evidenced by laboratory uplift tests on full size sheets of plywood/OSB.

Roof Shape
  • Hip - Roof having sloping ends and sloping sides down to the eaves line.
  • Gable - The portion of the roof above the eaves line of a double-sloped roof; the end section appears as an inverted V.
  • Flat - A horizontal roof with a pitch less than 10 degrees.

Roof-Wall Connection Refers to how the roof framing (i.e. trusses) is anchored to the wall to resist the upward force that strong winds can sometimes exert on the roof. Following are the typical types of connections that will require.
  • Toe-Nail – Rafter/truss anchored to top plate of wall using nails driven at an angle through the rafter/truss and attached to the top plate of the wall.
  • Clips – Metal clips installed on each truss/rafter that attach to the side only of the truss/rafter member and to the wall frame. Metal clip should be free of severe corrosion, have a minimum of 3 nails into the truss/rafter and 3 nails into the wall.
  • Single Wraps – Metal straps installed on each truss/rafter that wrap over the top of the truss/rafter and attach to the wall frame in one location. Metal strap should be free of severe corrosion, have a minimum of 3 nails into the truss/rafter and 3 nails into the wall.
  • Double Wraps – Metal straps installed on each truss/rafter that wrap over the top of the truss/rafter and attach to the wall frame in two locations. Metal strap should be free of severe corrosion, have a minimum of 3 nails into the truss/rafter and 3 nails into the wall at each location.