The following terms are used in the specifications for liability insurance and the financial tests liability coverage. The definitions contained in this section are intended to assist in the understanding of these regulations and are not intended to limit the meanings of terms in a way that conflicts with general insurance industry usage or with generally accepted accounting practices.
"Assets" means all existing and all probable future economic benefits obtained or controlled by a particular entity.
"Current assets" means cash or other assets or resources commonly identified as those that are reasonably expected to be realized in cash or sold or consumed during the normal operating cycle of the business.
"Current liabilities" means obligations whose liquidation is reasonably expected to require the use of existing resources properly classifiable as current assets or the creation of other current liabilities.
"Independently audited" means an audit performed by an independent certified public accountant in accordance with generally accepted auditing standards.
"Legal defense costs" means any expenses that an insurer incurs in defending against claims of third parties brought under the terms and conditions of an insurance policy.
"Liabilities" means probable future sacrifices of economic benefits arising from present obligations to transfer assets or provide services to other entities in the future as a result of past transactions or events.
"Local government" means a county, city, or town or any authority, commission, or district created by one or more counties, cities, or towns.
"Net working capital" means current assets minus current liabilities.
"Net worth" means total assets minus total liabilities and is equivalent to owner's equity.
"Substantial business relationship" means the extent of a business relationship necessary under applicable state law to make a guarantee contract issued incident to that relationship valid and enforceable. A "substantial business relationship" must arise from a pattern of recent or ongoing business transactions, in addition to the guarantee itself, such that a currently existing business relationship between the guarantor and the permit holder is demonstrated to the satisfaction of the department.
"Tangible net worth" means the tangible assets that remain after deducting liabilities; such assets would not include intangibles such as goodwill and rights to patents or royalties.
§ 62.1-44.15 of the Code of Virginia.
Derived from Virginia Register Volume 29, Issue 24, eff. September 1, 2013.