Legal Terms

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Master-Servant Rule.

The rule that all employers are obligated to protect the public from the acts of their employees. Courts hold employers liable for torts committed by employees in the course of their employment.

Material Fact.

In insurance, it refers to a fact which is so important that the disclosure of it would change the decision of an insurance company, either with respect to writing coverage, settling a loss, or determining a premium. Usually, the misrepresentation of a material fact will void a policy.

Mediation.

An informal means of trying to promote settlement of a dispute. It involves a third-party mediator who meets the parties to the dispute and tries to get them to agree on a settlement.

Misrepresentation.

The use of oral or written statements that do not truly reflect the facts either by an insured on an application for insurance or by an insurer concerning the terms or benefits of an insurance policy.

Mortgage.

Interest in real property conveyed to mortgagee as security for the loan of money by the mortgagee to the mortgagor, often the money being used by the mortgagor for the purchase of the real property from its seller (this is known as a purchase money mortgage).