Glossary

Duty to defend is a term used to describe an insurer's obligation to provide an insured with defense to claims made under a liability insurance policy. As a general rule, an insured need only establish that there is potential for coverage under a policy to give rise to the insurer's duty to defend. Therefore, the duty to defend may exist even where coverage is in doubt and ultimately does not apply. Implicit in this rule is the principle that an insurer's duty to defend an insured is broader than its duty to indemnify. Moreover, an insurer may owe a duty to defend its insured against a claim in which ultimately no damages are awarded, and any doubt as to whether the facts support a duty to defend is usually resolved in the insured's favor. With respect to directors and officers and employment practices liability insurance policies, policies containing explicit "duty to defend" wording obligate an insurer to assume control of the claim defense process, including selecting counsel and paying legal bills. In contrast, non-duty to defend (or duty to pay) policies require only that the insurer reimburse the insured for funds expended by the insured in defending a claim.

"Duty to pay" is used to describe the nature of an insurer's defense obligations under directors and officers and employment practices liability insurance policies. Forms containing duty to pay (or non-duty to defend) provisions require only that the insurer reimburse the insured for funds expended by the insured in defending a claim. In contrast, policies containing "duty to defend" provisions require the insurer to assume control of the claim defense process, including selecting counsel and paying legal bills.

A dwelling is a homeowners and dwelling property term denoting the structure on the residence premises that is listed in the declarations and used principally as a private residence, including attached structures. Examples of attached structures include carports and patio roofs.

Dwelling property coverage forms are alternatives to homeowners policies that may be used to insure physical damage to dwellings and personal property. Unlike homeowners forms, these policies do not insure liability or medical payments exposures. There are three dwelling property forms in the Insurance Services Office, Inc. (ISO), forms portfolio: the Basic Form (DP 00 01), the Broad Form (DP 00 02), and the Special Form (DP 00 03). The basic form covers only damage from fire, lightning, and internal explosion, but additional perils can be covered by endorsement. The broad form covers direct damage to dwellings and personal property on a broad named perils basis. The special form covers direct damage to dwellings and appurtenant structures on an all risks basis while covering personal property on a broad named peril basis.

Dynamic financial analysis is the name for a class of structural simulation risk model of insurance company operations, focusing on underwriting and financial risks, designed to generate financial pro forma projections. Statistical modeling techniques that project an outcome not on a static basis—that is, under one set of defined assumptions or the same assumption with one or two variables changed—but to project a range of possible outcomes assuming constant movements in interrelated variables.

Dynamic risk is risk that arises as a result of organizational change.

The "D" ratio is a factor used in the experience rating plan to separate the expected losses into primary and excess losses. A "D" ratio is the normal ratio of primary expected losses to the total expected losses and varies by state and by classification code.