Glossary

A nonimputation provision is a clause found in directors and officers (D&O) and professional liability policies stating that intentional misstatements or omissions in the application (e.g., failure to mention circumstances likely to produce a claim in the future) will not bar coverage for individuals who did not sign the application. In the absence of nonimputation provisions, such persons would otherwise be denied protection under the policy given these misstatements or omissions. In some instances, the nonimputation provision appears in the application for coverage, rather than in the actual policy form.

Noninsurable risk is a risk that cannot be measured actuarially or in which the chance of loss is so high that insurance cannot be written on it.

Noninsurance is the thoughtful and intentional abstention from the use of insurance to cover an exposure to loss; risk identification was thorough, the uninsured risks are known, and insurance has been considered. Uninsured losses are absorbed as a direct expense.

Noninsurance risk transfer is the transfer of risk from one party to another party other than an insurance company. This risk management technique usually involves risk transfers by way of hold harmless, indemnity, and insurance provisions in contracts.

Nonledger assets are assets that are not entered on the books of an insurer but instead are recorded directly in Exhibit 1 of the annual statement by way of a single-entry bookkeeping system. The two most important nonledger assets are "Interest, Dividends, and Real Estate Income Due and Accrued" and the excess of market or amortized value over the book value of certain invested assets.

Nonmedical refers to life or health insurance coverage written without a medical exam. However, the insured completes a detailed questionnaire concerning their health. This information becomes a warranty so that any misstatements could potentially void the policy.

Nonoperating working interest describes one that owns an interest in a gas or oil well or other mineral extraction enterprise but that does not participate in or have any responsibility for actual operation of the well or mine. An owner with a nonoperating working interest is usually made an insured under the insurance coverages written on the operation.

Nonowned automobile is described in commercial auto policies as an auto that is used in connection with the named insured's business but that is not owned, leased, hired, rented, or borrowed by the named insured. As used in the business auto policy (BAP), the term specifically applies to vehicles owned by employees and used for company business; as used in the truckers and motor carrier policies, it applies only if such autos are private passenger type autos. (Autos other than private passenger type owned by employees are classified as hired autos in the truckers and motor carrier policies.)

Nonparticipating refers to life insurance contracts in which no policy dividends are paid.

A nonparticipation settlement clause refers to a provision in professional liability policies that gives the insurer the right to settle claims against insureds—for any amount the insurer deems appropriate—without first consulting the insured. Such provisions are unfavorable, and only a minority of insurers use this approach. In contrast, most professional liability insurers' forms reserve for the insured the right to approve settlement amounts to claimants.