Glossary

A noncertified act of terrorism is a terrorist act that does not meet the criteria for a certified act of terrorism and does not trigger the federal reimbursement provisions of the Terrorism Risk Insurance Act (TRIA). Commercial insurers must offer coverage for "certified acts of terrorism" but are free to either cover or exclude "noncertified acts of terrorism."

Noncombustible construction is one of six building construction categories established by Insurance Services Office, Inc. (ISO), in its Commercial Lines Manual (CLM) for purposes of developing rates for insuring commercial property, based on susceptibility to damage by fire. The CLM description of noncombustible construction, followed by the associated ISO construction code, is exterior walls, floor, and supports made of metal, asbestos, gypsum, or other noncombustible materials (Construction Code 3). The construction code indicates the ranking of this building construction category within the six categories, with 1 as the least fire-resistive and 6 as the most fire-resistive.

Nonconcurrency is the condition created by two or more policies covering the same loss exposure that do not have identical inception and expiration dates. Nonconcurrency of an insured's umbrella policies and the liability policies required by the umbrella as underlying insurance is a problem because the nonconcurrent policy terms make it possible for a loss under an underlying policy's annual aggregate limit to use up part of the limit required by the umbrella and thus violate its underlying limits requirement.

Nonconcurrency of coverage triggers occurs when the coverage trigger in a primary policy differs from that of an excess or umbrella policy. Typically, this takes place when an umbrella policy is written on a claims-made basis and a primary policy is written on an occurrence basis.

Nonconforming use is a term used to describe buildings that are permitted in a particular area but no longer conform to current zoning regulations. These buildings are normally "grandfathered," meaning they are allowed to be used in spite of the nonconforming use. The right to continue nonconforming use, though, is often revoked when a building is damaged beyond a certain percentage of its value. In that case, the insured can only rebuild something that conforms to current codes, or it can rebuild at a different location. Either of these options may cost more than rebuilding the existing building at the current site.

Noncontributing (noncontributory) insurance is issued on the basis that it will not seek contribution from other insurance policies that apply to a covered loss on the same basis (e.g., primary). Requests for additional insured status sometimes specify that it be provided on a noncontributing or noncontributory basis. The additional insured in such cases is seeking assurance that its own policy will not be asked to contribute to a covered loss.

Noncontributory insurance refers to a plan of insurance for which the employer pays the entire premium and the employee does not contribute to premium payment.

Noncontrolled foreign corporation is a company that is owned in such a way that its financial results are not consolidated with any of its shareholders, and the shareholders are not allocated any portion of the company's income for tax purposes. If the NCFC is located in a jurisdiction that does not have an income tax, this creates income tax deferral, meaning no tax until income is repatriated to its owners.

Noncorrelated risks are loss exposures that result from different, unrelated perils and hazards.

A nonderivative suit is a lawsuit alleging that the acts of directors and officers of a corporation caused damage to the individual(s) bringing the suit. This is in contrast to derivative suits, which are brought by one or more stockholders on behalf of the organization, alleging financial loss to the organization.