Glossary

Riggers liability insurance covers a contractor's liability arising out of the moving of property and equipment that belongs to others, such as lifting air-conditioning units onto a roof with a crane. The standard commercial general liability (CGL) policy does not cover this risk due to the exclusion for "personal property of others in your care, custody, or control." Riggers liability coverage can be effected by attaching a riggers liability endorsement to the CGL policy that modifies or deletes the "care, custody, or control" exclusion. (Note that if the contractor is an insured under a builders risk policy on the project, coverage is usually provided in that policy for all of the materials and equipment being incorporated into the project. The builders risk policy may include a deductible, however, and may not include coverage for loss of use for which the contractor may be liable.)

Rights of residents refers to an array of statutory rights given by federal and state "residents rights" legislation to nursing home residents. The minimum resident rights specified by federal law include the following. Be treated with respect. Participate in activities. Be free from discrimination. Be free from abuse and neglect. Be free from restraints. Make complaints. Get proper medical care. Have your representative notified. Get information on services and fees. Manage your money. Get proper privacy, property, and living arrangement. Spend time with visitors. Get social services. Leave the nursing home. Have protection against unfair transfer or discharge. Form or participate in resident groups. Have your family and friends involved. These statutes may provide statutory penalties for violations. Some of the broader long-term care (LTC) facility liability policies available in today's market include a specific grant of coverage for violations of a "rights of residents" law, without which coverage may be in doubt.

Right of offset is a provision in a reinsurance agreement whereby balances due under a reinsurance agreement may be netted out against recoverables under the same agreement.

The right of recourse provision is a provision in fiduciary liability policies giving an insurer the right to subrogate against an insured. Subrogation is the process by which an insurer collects monies from a party responsible for causing a loss, for which an insurer has already made an indemnity payment. For example, assume that a fiduciary's negligence in administering an employee benefit plan caused a loss that was covered by a fiduciary liability policy. After the insurer pays that loss, a right of recourse provision would give the insurer the right to seek reimbursement from the fiduciary whose negligence caused that loss. Right of recourse provisions represent an exception to the general practice in the insurance industry whereby insurers do not subrogate against insureds. The right of recourse provisions have become relatively uncommon. In fact, few fiduciary liability insurers currently include right of recourse provisions in their forms. Instead, most fiduciary liability forms are silent as to the issue of subrogating against an insured.

Right to repair laws place restrictions on a homeowner's ability to sue a construction contractor for construction defects. Typically these laws require homeowners to give the contractor notice of the issue and an opportunity to repair the faulty work prior to filing a lawsuit. These laws include varying provisions for inspection and arbitration disputes. Further, in some states, a builder can argue that the homeowner caused or contributed to the loss by failing to maintain the property in accordance with written instructions provided by the builder. The effect of these laws is to make it more difficult for a homeowner to sue a builder, but the theory is that the resources will be channeled into repair of the defective home itself rather than litigation.

Ring fence/fencing occurs where a firm's assets or other funds are set aside for a given purpose and cannot be spent elsewhere. This is often done for regulatory, tax, or financing reasons. Also used to refer to a protection-based transfer of assets, often via offshore accounting, to lower tax burdens. When selecting a destination, careful scrutiny of the destination's legal and regulatory environment is needed.

Rip and tear coverage covers the cost of tearing out a contractor's bad work due to defects that make its inclusion in the project unsafe. The primary markets for rip and tear coverages are concrete and masonry contractors. The normal method of providing this coverage is by endorsement to the commercial general liability (CGL) policy. (There is no standard endorsement for this purpose, but insurers active in construction markets may have company-specific endorsements that add this coverage back.) For coverage to apply, the work must fail to meet contractual specifications or other industry standards that apply to the type of construction into which the materials were incorporated. There is no coverage with respect to defects that are purely cosmetic. A similar coverage, contractors rework coverage, covers both the cost of tearing out bad work and the cost of replacing it. The primary markets for rip and tear and contractors rework coverage are concrete and masonry contractors.

Risk-adjusted return on capital (RAROC) refers to a target return on equity measure in which the numerator is reduced depending on the risk associated with the instrument or project. This is a term used in the financial services industry and in enterprise risk management. In the insurance industry, RAROC is typically employed to evaluate the relative performance of business segments that have different levels of risk; the different levels of risk are reflected in the denominator. Evaluating financial performance under RAROC calls for comparison to a benchmark return; when the benchmark return is risk-adjusted, the result is similar to risk-adjusted return on risk-adjusted capital (RARORAC), though the term RAROC is still applied.

Risk-adjusted return on risk-adjusted capital (RARORAC) is the combination of risk-adjusted return on capital (RAROC) and return on risk-adjusted capital (RORAC) in which both the numerator and denominator are adjusted (for different risks). This is a term used in the financial services industry and in enterprise risk management.

Risk-adjustment investment describes the funds, or capital, specifically identified to pay for the risk that is not transferred to a counterparty or an insurer. Such risk is commonly referred to as a retained risk. The difference between risk-adjusted investment yields and other normal business investments yields is known as the opportunity cost of risk.