Glossary

Naturally occurring substances are substances that are naturally present in the environment but still may expose organizations to environmental liability. Examples include mercury, arsenic, asbestos, pyrite, silica, and radon. Most of these substances are discovered during development or construction. For construction firms, the biggest exposure is disturbance of this material through excavation, street/road construction, and any other intrusive type work. Environmental and pollution liability policies often do not cover this exposure by exclusion, definition, or omission.

Natural death indicates death not caused by external sources; usually pertains to death from disease or old age.

Negative basis is basis risk in the context of hedging a portfolio and is the difference between a specific portfolio of losses or investments and an index used as the underlying asset for the hedge. The risk of basis extends in two directions, up and down, or positive and negative. Positive basis exists when the index produces better results than the specific portfolio. Negative basis means that the results of the index fall below the results of the specific portfolio.

Negligence is a tort involving failure to use a degree of care considered reasonable under a given set of circumstances and can lead to legal liability of the tortfeasor. Acts of either omission or commission, or both, may constitute negligence. The four elements of negligence are a duty owed to a plaintiff, a breach of that duty by the defendant, proximate cause, and an injury or damage suffered by the plaintiff. Liability policies are designed to cover claims of negligence.

Negligence per se is conduct that violates standards of care as established by statute or law. Depending on state law, violating a statutory standard of care can be interpreted as (1) conclusive proof of negligence, making the defendant automatically liable without giving the defendant a chance to explain their actions; (2) presumptive proof of negligence, making the defendant liable unless the defendant can rebut the presumption of negligence by explaining the reasons for their actions; or (3) evidence of negligence, which can be considered when deciding whether the defendant should be liable at all.

Negligent entrustment is failure to exercise the appropriate degree of care in allowing someone else to operate or use one's auto, aircraft, or watercraft. Under an insurance policy that excludes liability arising out of the use of an auto, aircraft, or watercraft owned by an insured, negligent entrustment may still constitute a separate—and therefore unexcluded—category of negligence, unless a contrary provision is made specific in the policy.

Negligent evaluation refers to a type of employment-related claim in which an employee plaintiff asserts that the employee's performance evaluation was excessively negative, unfairly low, or otherwise inaccurate and therefore did not reflect the employee's actual, higher level of performance. Coverage for such claims may be afforded by employment practices liability insurance (EPLI) policies.

Negligent provider selection is a key source of liability for a managed care organization (MCO) that arises from an MCO's negligence in selecting (or retaining) a healthcare provider who is deficient in delivering healthcare services, and such deficiency produces an injury. MCOs owe a duty to their subscribers to investigate the competence of their healthcare providers and to exclude those who pose a foreseeable risk of harm. Coverage for this exposure is afforded by a managed care liability insurance policy. Such claims have also been made against employers in which employees allege that the employer negligently selected an MCO or health insurer under an employee benefit plan.

A negligent referral is a claim made against a professional who negligently refers a client/patient to another professional. Negligent referral claims are usually made when one professional refers a client/patient to a more specialized practitioner who then commits an error or omission that injures the claimant. For example, if a family physician refers a patient to a surgeon who injures the patient during an operation, the patient could allege that the family physician negligently referred them to the surgeon. Professional liability insurance typically covers negligent referral claims when they are made against the professional who refers a client/patient to another professional.

Negligent retention is a type of employment-related claim in which a plaintiff asserts that an employer failed to discharge an employee who management knew, or should have known, had a propensity toward violence, sexual harassment, or dishonesty. For example, negligent retention claims are often made after an employee commits a mass shooting at a plant or office. Injured workers then sue the employer, alleging that the company was negligent in not terminating the employee sooner. The basis of the claimants' argument is that on prior occasions, the employee had provided clear evidence of a propensity for such violence (e.g., they had issued threats or brought a weapon onto the company's premises). Coverage for such claims is available under employment practices liability insurance (EPLI) policies.