| Absolute Liability – A legal responsibility towards damages that are final and binding and the cause of which need not be proven. |
| Absolute Ownership – An explicit right of ownership and possession which is free from any restrictions or limitations, given to the insured. |
| Access to The Records Clause – The ability of the reinsurer to access/inspect the books of accounts and official records of the reinsured company at its own expense. |
| Accessory – An addition to a motor vehicle that does not change its performance or structure. |
| Accident And Health Insurance – Coverage for accidental injury, accidental death, and related health expenses. Benefits will pay for preventative services, medical expenses, and catastrophic care, with limits. |
| Accident Insurance – Insurance cover of the loss of any limbs or eyes, etc. In the event of an accident. It is also generally covers compensation to the policyholder’s dependents in the event of death. |
| Accident Year – An accident year grouping of claims means that all the claims relating to events that occurred in a 12 month period are grouped together, irrespective of when they are actually reported or paid and irrespective of the year in which the period of cover commenced. |
| Accident – An event or occurrence which is unforeseen and unintended. |
| Accidental Bodily Injury – Injury to the body as the result of an accident. |
| Accidental Death Benefit – An endorsement that pays the beneficiary an additional benefit if the insured dies from an accident. |
| Accompanied Baggage – Baggage carried by a person during travel |
| Accord and Satisfaction – When one party has discharged its obligation under a contract, it may elect to release the other party from its obligations. When this is done in return for a new consideration, the release is known as accord and satisfaction. |
| Accounts Receivable (Debtors) Insurance – Indemnifies for losses that are due to an inability to collect from open commercial account debtors because records have been destroyed by an insured peril. |
| Accumulated Stocks Clause – Pertains to the use of the accumulated finished goods stock at a time when the activities of the business have been affected by fire etc. Which has halted the manufacturing process, affecting the bottom line of the company and thereby the potential profit it could have made. |
| Accumulation Period – The duration for which premium payments are made by the annuitant under life insurance. |
| Acquisition Costs – Costs incurred in setting up a new business – product launch and publicity expense, administrative and clerical expense, fee paid to the medical examiner, inspection reports expense etc. |
| Act in Force Clause – A clause in relation to statutory liability that accounts for changes in the law during the cover period on the amount of compensation, through constant rate revision and adjustment. |
| Act Liability With Fire &/or Theft – A provision that covers a motor vehicle against the insured’s liability along with damage to the vehicle due to fire, ignition, explosion, burglary or theft which is adjusted through a reduction in the premium due for payment. |
| Act of God – Event caused by nature that is so unpredictable as to be unavoidable, for example, the timing and location of earthquakes or floods. Acts of God are normally insured against as a matter of course. |
| Act Only Policy – Indemnity for the insured for all motor vehicles as per the limits prescribed in the motor vehicle act, 1988, with respect to his/her legal liability to pay compensation for death, injury or damage to a third person or property in an accident or event. |
| Actual Cash Value – A form of insurance that pays damages equal to the replacement value of damaged property minus depreciation. |
| Actual Total Loss – Insured item that has been lost or completely destroyed. The full insured value is payable by the insurer. |
| Actuarial Cost Method – Also known as actuarial funding method, it is used by the pension company to determine the premium to a pension so that at the time of payout, the company either breaks even or has money in excess of the pension premium and its returns. |
| Actuarial Equivalent – If the periodic payments on two insurance policies equate to the same present value under some pre-determined assumptions and is generally used to compare policies or plans. |
| Actuarial Science – The science of risk evaluation, determination of premiums adequate to meet the risks and provisions for unexpired risks and liabilities. |
| Actuarially Fair – An insurance agreement is said to be actuarially fair if the premium payment equates to the expected value of amount or benefits received under the policy. |
| Actuary – A person professionally trained in the technical aspects of pensions, insurance and related fields. The actuary estimates how much money must be contributed to an insurance or pension fund in order to provide future funds. |
| Ad Valorem Duty – Duty determined based on percentage of value of cargo. |
| Ad Valorem – Calculated proportionately to a value. In this case it refers to insurance premium calculated proportionately to the value of the property or subject under policy coverage. |
| Additional Cover – An insurance policy extended to cover additional risks like riots, strikes etc. On payment of additional premium. |
| Additional Expenses-Strikes – This term used in relation to cargo refers to an event when the destination port is bound by a strike at the time the cargo is due to arrive at that port. To provide for this contingency, the cargo owner can opt for an additional expenses (strikes) cover to be effected during a period of 12 months. |
| Additional insured – An assured party specifically named under an insurance policy that is not automatically included as an insured under the policy of another, but whom the named insured’s policy provides a certain degree of protection. (e.g. Bankers or financial institutions) |
| Additional Insureds – Persons who have an insurable interest in the property/person covered in a policy and who are covered against the losses outlined in the policy. They usually receive less coverage than the primary named insured. |
| Add-ons – Purchase of additional benefits or cover on the existing policy. |
| Adhesion Contract – A contract in which the signature of the person accepting the contract need not be valid since the courts will consider the acceptor’s interests over that of the issuer of the contract. |
| Adjuster – Carries out the process of investigation and settlement of damages for the insured. |
| Adverse Selection – The tendency of those exposed to a higher risk to seek more insurance coverage than those at a lower risk. Insurers react either by charging higher premiums or not insuring at all. In the case of natural disasters, such as earthquakes, adverse selection concentrates risk instead of spreading it. Insurance. Works best when risk is shared among large numbers of policyholders. |
| Affreightment – Carriage of goods by sea. |
| Age Limit – The qualifying age for an insurance policy. |
| Agent – An insurance company representative licensed by the IRDA negotiates or effects contracts of insurance, and provides service to the policyholder for the insurer. |
| Aggregate Deductible – A type of deductible that applies for an entire year in which the insured absorbs all losses until the deductible level is reached, at which point the insurer pays for all loses over the specified amount. |
| Aggregate Indemnity – Maximum coverage for loss for which an insured can be indemnified, irrespective of the amount or number of insurance policies bought. |
| Aggregate Limits – A yearly limit, rather than a per occurrence limit. Once an insurance company has paid up to the limit, it will pay no more during that year. |
| Agreed Value Policy – A policy that ensures to pay a specific amount, without taking into consideration the current market value at the time of total loss. |
| Airway Bill – Document bearing details of the goods and consignee name, made by the consignor of goods sent by air freight. |
| Aleatory Contract – A legal contract in which the outcome depends on an uncertain event. Insurance contracts are aleatory in nature. |
| Alien Insurer – An insurer domiciled in and licensed under the laws of a country outside a given jurisdiction. eg from an Indian perspective, a Bangladesh insurer would be an alien insurer. |
| All Risk – An insurance policy that covers every possible claim that has not been specifically excluded from the policy. |
| Allied Lines – Refers to insurance cover for property from the following events – damage from fallen timber, sprinkler systems, and vandalism barring fire damage for which a separate fire policy is bought. |
| All-risks Policy – Insurance policy that covers personal possessions against loss or damage, usually anywhere in the country. All- risks policies are frequently extended to cover possessions in other parts of the world, and are therefore often used to insure small moveable items. Despite the term ‘’all-risks’’ there is usually some important exclusion. |
| Alternate Delivery Systems – A health service (such as nursing facility, hospice and at-home service) which is monetarily cheaper than a hospital or an inpatient care facility. |
| Ambulatory Care – Also referred to as outpatient care, it includes medical services such as diagnosis, observation, consultation, treatment and rehabilitation. |
| Amendment – A change to an existing rule or protocol, provided in writing. |
| Any One Accident (AOA) – One or more claims related to the same error or omission in a professional service. |
| Any One Vessel (AOV) – Commonly used in marine cargo insurance, refers to the insurer’s maximum commitment under the policy for all cargo in respect of any one vessel. |
| Any One Year (AOY) – The concept of AOA and AOA go hand in hand wherein the insured can select a pre-determined indemnity limit in the ratio of 1-1, 1-2, 1-3, 1-4 of AOA-AOY and the premium is determined based on the AOA limit calculated. |
| Application – A form filled out by the applicant for the purpose of receiving insurance from the insurer on submission of certain information required in order to provide insurance cover. |
| Appraisal – The evaluation of a claim by a person authorized by the company and the policyholder to assess the extent of damage. |
| Arbitration – A form of alternative dispute resolution where an unbiased person or panel renders an opinion as to responsibility for or extent of a loss. |
| Arson – The willful and malicious burning of, or attempt to burn, any structure or other property, often with criminal or fraudulent intent. |
| As is Where is – Refers to a present state of condition and location of the goods at the time of sale, in which case the buyer takes on all the risks. |
| Assessor – Also known as the surveyor, this person determines the estimated value of the goods for the underwriters to be able to settle the claim based on the sum payable arrived at after value estimation. |
| Assets – Property, valuables, investments, bank and cash balances owned by an entity and reflected in the balance sheet. |
| Assignment – Legal transfer of a property, right or obligation from one party to another. |
| Assumption of Risk Doctrine – A legal principle under which the responsibility for loss is passed onto the injured party because he/she had complete knowledge and understanding of the risks involved in the said situation. |
| Assumptions – Risk accepted by a reinsurer. |
| Assurance – Insurance that provides for an event that will certainly happen (such as death), as opposed to an event that may happen. There are many types of assurance policies such as endowment assurance, life assurance, and so on. |
| Assured – Person who received the proceeds of an assurance policy when the policy matures or the person assured dies. |
| Attachment Point – Refers to the level at or beyond which excess insurance or reinsurance limits would apply. |
| Attractive Nuisance – An exception to the law that relates to trespassers that need special care in an artificial condition on land. (eg. Children near a swimming pool). |
| Automatic Reinstatement Clause – An automatic renewal clause included in a property insurance policy whereby on payout of the claim the original policy and coverage amount is reinstated. |
| Automatic Reinsurance – “An arrangement whereby the reinsurer agrees to take on the risk for a certain category of policies from the insurer. “ |
| Automatic Sprinkler – A measure against fire, using a water supply system which distributes the water equitably and with adequate pressure. Strongly recommended by insurance companies to avert property loss or damage and interruption of daily activities. |
| Automobile Fleet – Multiple motor vehicles owned by the same person or company, covered by a single insurance policy. |
| Average Adjuster – An expert who determines the liabilities of various parties to a common maritime and to classify the various items of expenditure between general and particular average, viz, ship, freight and cargo. |
| Average Clause (Condition of Average) – In marine and commercial insurance and some fire insurance and some fire insurance policies, a clause in the policy that stipulates certain items shall be subject to average if there is underinsurance. |
| Average Clause – A clause in the policy which states that if at the time of damage, the property value is less than its real value, then the compensation by the insurer will be reduced to the extent of the property value after loss. |
| Aviation Insurance – Includes a master policy that covers employees in a company against the dangers of an aircraft mishap. |
| Baggage Insurance – This insurance coverage is available to the insured or his or her family and provides protection against damage or loss of personal baggage. |
| Bagged Cargo Warranty – Marine cargo insurance excludes any loss of content from the bags through the seams and natural losses to cargo weight. |
| Ballast – It is the material that is used to provide stability to vessels that are carrying no cargo. |
| Bancassurance – Involvement of banks in the traditional insurance market. |
| Bank Guarantee – According to the Indian laws, all premiums must be physically paid to the insurance company on or before the start of the coverage. According to the insurance act and rules, bank guarantee in favor of the insurer is acceptable only when premium cannot be determined when coverage commences. |
| Bankers Indemnity Policy – This is a specialized policy available for banks and protects the bank against destruction or losses of money and/or securities due to fire, burglary, riot, or terrorism inside or outside the premises caused by employees or other persons. |
| Bareboat Charter – This is a certain kind of charter where the person chartering the vessel incurs all the expenses incurred during the period when the charter agreement is valid. |
| Barges – These are small vessels used to transmit goods from one port to another. Most of these are used to carry bulk cargo. Some barges are used for transporting cargo from the shore to the ships. |
| Barratry – Some instances include scuttling of the vessel by the crew, deliberately running aground, or setting the boat on fire. Losses arising due to such acts are covered under clauses ITC – hulls and ICC (A). |
| Base Premium – This is the amount of premium charged by the direct insurers. |
| Basic Coverage Form – Commercial or personal insurance property forms providing basic covers. Generally offer the most limited kinds of coverage surpassed by terms like “special forms” or “broad forms”. |
| Basic Premium – This is the gross amount charged by the insurance company to the policyholder for providing coverage under the policy. |
| Basic Rate – This represents the rate of premium shown in the rate guide or the insurance company manual for specific kinds of insurance coverage. |
| Basis of Loss Settlement – This is a distinct section inserted within the policy document listing the basis of settling different kinds of claims covered under the policy. |
| Basis of Valuation Clause – Provision that describes the method to calculate the value of the cargo for the purposes of declaration under marine cargo insurance open coverage and policies. |
| Beneficiary – Person/s or entity/ies named in the insurance policy as the recipient of the proceeds in the event of the demise of the insured. |
| Benefit of Insurance Clause – A term in the policy document under which the bailee of goods claims benefits through an insurance policy procured by the owner on the goods under the care of such bailee. Any such clause included in contract of carriage that has been issued according to the carriage of goods sea act is not legally valid. |
| Benefit Period – Time period (generally between 1 and 3 years) during which any major medical benefits are payable on the satisfaction of the deductible. |
| Benefits – This is the amount that the insurance company will have to pay claimants, assignees, or beneficiaries under each kind of policy. |
| Bill of Lading – Document detailing the transfer of goods from a (foreign) supplier to a buyer. It may be used as a document of title. |
| Bind – In property and liability insurance, the agent customarily is given the authority to accept offers from prospective insured’s without consulting the insurer; in such cases, the agent is said to bind the insurer. |
| Binding Receipt – A receipt provided for payment of the premium and accompanies the insurance application. When the policy is approved, it binds the insurer for making the policy effective from the date on this receipt. |
| Blanket Contract – Health insurance contract providing benefits like accidental death or dismemberment for all classes of people not identified individually. Primarily used for groups like sport teams, campers, and travel insurance for company personnel. |
| Blanket Insurance – A policy designed to provide coverage under a single limit for two or more items (e.g. Building and/or contents), two or more locations, or a combination of items and/or locations. |
| Blanket Medical Expense – It is a provision that entitles insured persons to collect the maximum amount towards the coverage of hospital and medical expenses included under the policy. This is without any limitation on the types of individual medical expenses. |
| Boat Owners Package Policy – Special policy package for owners of boats combining physical damage insurance, liability insurance, medical cost insurance, and other covers within one single contract. |
| Bodily Injury Liability – Liability arising from injury or death of another person. |
| Boiler and Machinery Insurance – Covers loss arising from the operations of pressure, electrical, and mechanical equipment. The policy covers the loss to the boiler or machinery, business interruption loss, and property damages. |
| Boiler and Machinery Policy – Protection against any loss arising due to accidents related to the pressure vessels, boilers, and other kind of machinery inclusive of the equipment. Also covers liability arising due to such accidents. |
| Bonus-Malus – A bonus-malus system is a No-claim Bonus (or No-claim Discount) system in which the premium level reached after a policyholder has made claims may be higher than that corresponding to the point of entry. The term is used throughout Continental Europe and elsewhere. |
| Book Value – The purchasing cost after deducting depreciation. |
| Bordereau – Itemized transaction statement (in spreadsheet format) used in reinsurance. |
| Breach of Condition – Violation of any terms or conditions that have been agreed upon in the insurance policy document, could result in the coverage being withdrawn in case of severe breach. |
| Break Bulk – Carriage of goods other than by container. |
| Broad Form – Property insurance covering the dwelling and other structures at their replacement costs. Provides additional coverage with greater list of possible perils. |
| Broker – A marketing specialist who represents buyers of insurance and who deals with companies in arranging for the coverage required by the customer. |
| Builder’s Risk Insurance – Insurance protection against any losses to the buildings or structures that are still under construction. |
| Bulk Cargo – Cargo that is not packaged and is directly loaded in the vessels’ holds. |
| Bulk Carrier – Consignor of bulk cargo tendering the cargo for transporting to the consignee. |
| Burglary – Breaking and entering into another person’s property with felonious intent. |
| Burglary and Theft Insurance – Insurance cover provided for property losses arising from robbery, burglary, or larceny. |
| Burning Ratio – The ratio of losses suffered to the amount of insurance in effect. |
| Business Income Insurance – Coverage for the reduction in revenue in the event of an insured peril. |
| Business Interruption Insurance – Protection for a business owner against losses resulting from a temporary shutdown because of fire or other insured peril. The insurance provides reimbursement for lost net profits and necessary continuing expenses. |
| Business Interruption Insurance – Losses arising due to temporary halting and shutdown of business due to fire or other insured perils. Insurer provides reimbursement of profits and continuing expenditure. |
| Business Liability – Describes liability covers provided under the business owners liability coverage form. Includes bodily injuries, fire damages, property damages, advertising, and personal injuries. |
| Business Personal Property – Conventionally, these are known as “contents” business personal property includes machinery, equipment, furniture, materials, fixtures, and other owner’s properties used for the business. |
| Cancellable Policy – Insurance contract that is cancellable either by insured or insurer before the expiration of the policy. |
| Cancellation – The discontinuance of an insurance policy before its normal expiration date, either by the insured or the company. |
| Captive Insurance Company – A company owned solely or in large part by one or more non- insurance entities for the primary purpose of providing insurance coverage to the owner or owners. |
| Cargo Insurance – Type of Transit insurance that protects the shipper of the goods against financial loss if the goods are damaged or lost. |
| Case Management – A system of coordinating medical services to treat a patient, improves care, and reduce cost. A case manager coordinates health care delivery for patients. |
| Cash Against Document (CAD) – Method of payment for goods for export, whereby the documentation for a shipment is sent to an agent or bank at the destination. These are passed to the consignee, who makes the payment. The consignee is free to take delivery of the shipment when it arrives. |
| Catastrophe – In the context of general insurance a catastrophe is a single event which gives rise to exceptionally large losses. The exact definition often varies and is often dependent on excess of loss wordings e.g. It might mean all losses, in a 72 hour period, arising from a wind storm. |
| Catastrophe Cover – Type of re-insurance on an excess of loss basis to protect against an accumulation of losses arising from one event. |
| Catastrophe Reinsurance – This is a form of aggregate excess of loss reinsurance providing coverage for very high aggregate losses arising from a single event, which may be spread over a number of hours; 24 or 72 hours is common. |
| Catastrophe Risk – In insurance, an exceptional loss for example, resulting from a flood or earthquake. |
| Causes of Loss – The various perils that are insured within the insurance plan. |
| CEDE – To transfer to a reinsurer all or part of the insurance or reinsurance risk written by a ceding company. |
| Central Fund (Lloyd’s) – A contingency reserve built up from contributions by Lloyd’s Names and held by Lloyd’s as a layer of protection for policyholders. |
| Certificate of Insurance – A statement of coverage issued to an individual. It is a proof of insurance. Generally, it is issued for Motor and Marine insurances. |
| Certificate of Motor Insurance – Document that confirms the existence of a valid motor insurance policy. It must state the name of the policyholder, the registration no. Of the vehicle, dates of commencement and expiry of the insurance, the person or persons insured to drive the vehicle, and any limitations on use. The form should be as per Motor Vehicles Act, 1988. |
| Cession – Amount of the insurance ceded to a reinsurer by the original insuring company in a reinsurance operation. |
| Claim – A request by a policyholder for payment following the occurrence of an insured event. A claim does not necessarily lead to a payment. |
| Claim Amount Distribution – A statistical frequency distribution for the amounts of claims. |
| Claim Frequency –The number of claims in a period per unit of exposure, such as, the number of claims per vehicle year for a calendar year or per policy over a period. |
| Claimant – Person seeking reimbursement for any loss covered under the terms and conditions of the insurance policy. |
| Claim-Made Policy – Insurance Policy in which the insurer must meet only claims made during the time cover is provided (irrespective of when the loss occurred). |
| Claims Incurred – Claims that have occurred, irrespective of whether or not they have been reported to the insurer. |
| Claims-Made Coverage – Liability coverage only when written claims are made within the policy term or any extended period; policies with retroactive date, any occurrence before that date is not covered. |
| Classification Clause (Cargo) – Clause within cargo insurance open coverage that provides details of minimum classification for vessels bound overseas acceptable to insurers for carriage of the insured cargo paying premium rates agreed within the contract; cargo carried by lower class ships are covered but entail higher premium payment. |
| Clause – Section or para within the insurance policy explaining, clarifying, or defining conditions of the cover. |
| Coinsurance – A method of sharing a risk among a number of direct insurers, each of which has a separate direct contractual relationship with the insured and is, therefore, liable only for its own contractual share of the total risk. The term is also used in certain excess of loss contracts to refer to the proportion of claims retained by the cedant. |
| Co-insurance – Method of sharing insurance risk between several insurers. The policyholder will deal as a lead insurer who issues documents and collects premiums. The policy will detail the shares held by each company. |
| Collision Coverage – Protection against physical damage for the policyholders’ owned vehicles resulting due to collision with any other thing or due to upset. |
| Commercial General Liability (CGL) Coverage – General liability cover written as monoline policy or component of commercial package; replacing former “comprehensive” general liability forms; latest forms offer sublines, broader coverage, with two variations “occurrence” and “claims made” covers. |
| Commercial Lines – Insurance of businesses, organizations, institutions, governmental agencies, and other commercial establishments. |
| Commercial Umbrella – A liability policy designed to cover catastrophic losses. |
| Commission – The part of an insurance premium paid by the insurer to an agent or broker for his services in procuring and servicing the insurance. |
| Composite Insurer – A single insurance company writing both life and non-life business. |
| Comprehensive Coverage – Portion of an auto insurance policy that covers damage to the policyholder’s car not involving a collision with another car (including damage from fire, explosions, earthquakes, floods, and riots), and theft. |
| Comprehensive General Liability Policy – Policy covering different kinds of general liabilities, operations and premises, products liability, contractual liability, owners and contractors protective, completed operations, and broad form covers; most jurisdictions replace new commercial general liability forms including optional and standard covers in earlier forms. |
| Comprehensive Personal Liability Policy (CPL) – Personal liability contract providing personal liability cover for insured and family members needs resulting from various personal reasons; can include ownership of residential properties, pets, activities, sports, or other daily activities. |
| Concealment – Deliberate failure of an applicant for insurance to reveal a material fact to the insurer. |
| Conditions – Provisions inserted in an insurance contract that qualify or place limitations on the insurer’s promise to perform. |
| Consequential Loss – Insurance cover for financial losses arising following damage (e.g. A fire) to business premises. |
| Consequential Losses – Losses other than property damage that occur as a result of physical loss to a business for example, the cost of maintaining key employees to help reorganize after a fire. |
| Consideration – In some forms of contract, the agreement is made binding by the payment of a sum of money from one party to the other. Such a payment is known as a consideration. The term is also used informally to mean any form of payment. |
| Consignment – Shipment of goods sent to someone for example, an agent, usually so that he or she may sell them for the consignor. |
| Constructive Total Loss – Partial loss resulting from sufficient degree for making the cost of repair much more or at least equal to the value of the property. |
| Contract – A binding agreement between two or more parties for the doing or not doing of certain things. A contract of insurance is embodied in a written document called the policy. |
| Contract Carrier – Transportation company carrying goods for only certain clients and not general public (like general carriers). |
| Contractor’s All Risks – Type of insurance that provides compensation to contractor in the event of damage to construction works from a wide range of perils. |
| Contractual Liability – Legal liability of another party that the business firm agrees to assume by a written or oral contract. |
| Contribution – It is a team insurance in which a risk has been insured twice over, and each insurance company shares the costs of a claim payment. |
| Contribution – More than one party provides risk cover; each insurer is responsible for protecting its loss; when assured recovers full compensation from one insurer, the company is entitled for recovering proportionate amounts from other insurers; generally used in marine insurance; also towards contributions paid by the insured connected to salvage or general coverage. |
| Contributory Negligence – Lack of care in looking after something that reduces the value of damages or an insurance payment in the event of a claim being made. |
| Coordination of Benefits (cob) – Method used within group health plans for designation of the order followed by multiple carriers towards payment of the benefits and prevent duplicating benefits. |
| Co-payment – The component (either percentage or fixed amount) of medical bill paid by the patients; balance paid by the insurance company. |
| Corridor Deductible – Important medical plan deductible excluding the benefits provided through basic plan when both the basic and supplemental group major medical expenses plans are effective. |
| Cost of Pure Risk – Costs related to pure risks, such as those from shareholders perspective, insurance costs, retained costs, loss prevention costs, etc. |
| Cost of Risk – Decrease in the value of business arising due to risks. |
| Country Damage – Marine term related to damage of bagged or baled goods resulting from excess moisture from dampness of the ground or exposure to climate or grit, sand or dust entering due to inclement weather or windstorm. |
| Cover Note – A note issued by an insurance company to confirm the existence of insurance cover pending the issue of formal policy documentation. An cover note is particularly useful where the policyholder is under a statutory obligation to be covered by insurance and may be required to show evidence of cover, for example third party motor insurance. |
| Coverage – Scope of available protection under the insurance contract; any of the several risks covered within the policy. |
| Coverage Trigger – Method whereby particular claim being covered under the plan is determined; example difference between cover triggers of liability “occurrence” and “claims made” forms is in the first instance loss should occur during policy term and in the second instance claim must be filed during the policy period. |
| Covered – Any individual covered under pension plan fulfilling the eligibility needs within the plan; person for whom the benefits have been accrued; or individual receiving the benefits under the coverage. |
| Credibility Factor – Weightage given to individual insured’s previous experience for calculating the premium for future coverages. |
| Credit Health Insurance – Type of health insurance cover for borrower; specifically for instalment purchase agreement; benefits cover various obligations of borrowers payable to the creditors. |
| Credit Insurance – Guarantee for manufacturers, service organizations, wholesalers confirming payment towards shipped products or rendered services; applicable to part of working capital represented by the accounts receivable. |
| Crop-Hail Insurance – Protection against damage to growing crops because of named perils. |
| Cross Liability Endorsement – In the event of claim by one insured for which another insured cover by the same policy may be held liable, this endorsement covers the insured against whom the claim is made in the same manner as if separate policies had been issued. |
| Dacoity – Robbery by group of people; the standard burglary insurance policy offered to businesses and dwellings cover any losses arising due to dacoity. |
| DAF (Delivery at Front) – Contract term whereby sellers undertake goods delivery at predetermined location or point at the border of two countries. |
| Damaged Arrived Value – It refers to the market value of the goods in damaged condition. |
| DDP (Delivery Duty Paid) – Contractual term under which the sellers agree to deliver goods at the destination within the country and pay the customs duty. |
| DDU (Delivery Duty Unpaid) – Sale contract where seller agrees to deliver goods at the prespecified destination in the country of the buyer; however, the duty must be paid by the purchaser. |
| Deadfreight – Space booked on the ship but not used by the party still entails payment of freight charges known as dead freight; right to these charges can be exercised by the vessel owner under certain charter parties. |
| Dealer – An authorized agent of manufacturers responsible for sales of manufactured vehicles or goods. |
| Death Benefit – Payment made to nominee or legal heir of the insured within the personal accident insurance plan on the demise of the holder. |
| Debris Removal Clause – The clause extends insurance coverage to include the cost of debris removal resulting from damage caused by covered loss up to a specified limit of loss. |
| Deck Cargo – The cargo carried by the ship on its deck; cargo insurance is commonly available for goods being carried under deck unless the policy document clearly states the cover being available for goods being shipped on deck. |
| Declaration Clause – Clause found in marine cargo open cover or open policy; provides all the dispatches within the purview of open cover or policy needs to be declared without any exception irrespective of arrival or not. |
| Declarations – Various statements within the insurance plan providing information about the life or property being insured or used for the purpose of underwriting and rating requirements and for identifying the life or property to be covered. |
| Declination – Insurance company’s refusal for providing insurance to an individual after carefully evaluating the application and other related factors. |
| Declinature – Refusal by the insurance company for acceptance of proposed risk or for renewal of an existing policy. |
| Deductible – The portion of an insured loss borne by the policyholder. The amount or percentage is specified in the policy. |
| Deductible, Period – Applicable deductible related to every claim expressed as the number of days relating to which it will not be payable under the insurance contract. |
| Defeasible Interest – Relevant to marine adventure; interest may be discontinued once the travel has commenced; for example importer insuring cargo purchased from overseas seller although he is entitled in case seller is guilty of default or delay for rejecting goods or treat at sellers’ risks. |
| Defence Costs – Expenses and costs incurred by defendants in legal suits connected to defending the filed case against her or him by the plaintiff. |
| Dental Insurance – Group or individual plan helping the payment of normal dental service costs as well as the damage to teeth due to an accident. |
| Depreciation – A decrease in the value of property over a period of time due to wear and tear or adolescence. Depreciation is used to determine the actual cash value of property at time of loss. |
| DEQ (Delivery Ex Quay) – Similar to the def contract; with an additional responsibility of the seller to ensure goods are placed at quay. |
| DES (Delivery Ex Ship) – Seller is responsible for arranging shipment of goods to the destination port as well as incur the costs and risks until delivery to the said destination. |
| Direct Loss – Financial losses resulting from directly insured risks. |
| Direct Premiums Written – Casualty and property insurance written premiums (lower return premiums) without providing for any allowance for the premiums towards ceded or assumed reinsurance. |
| Direct Premiums – Property/casualty premiums collected by the insurer from policyholders, before reinsurance premiums are deducted. Insurers share some direct premiums and the risk involved with their re-insurers. |
| Director’s and Officer’s Liability – Personal liability cover for directors and officers because of wrongful acts in their managerial capacities; costs of defending these are also covered and can be paid before final judgement; acts as protection for any claim brought against company’s directors or officers for alleged or actual neglect of duties, errors, or misstatements while in their management position. |
| Directors’ and Officers’ (D & O) Liability Insurance – Type of insurance that provides a company’s directors and officers with cover against losses incurred through misleading statements or negligence. |
| Disability – Any condition curtailing to an extent an individual’s capability to carry on her or his normal tasks; could be temporary or permanent; or partial or complete disability. |
| Disability Benefit – Periodic payments (often monthly) paid to the participants under certain retirement plans; when these participants are eligible to receive the benefits and are totally or partially disabled before the regular date of retirement. |
| Disability Income Insurance – Health insurance that provides periodic payments if the insured becomes disabled as a result of illness or accident. |
| Disclosure – Duty of the insured individual and his/her broker to provide the underwriter details on all material events prior to acceptance of the risks. |
| Discovery Period – Time allowed by the insured post termination of specific bond and policy provisions for discovering that s/he has actually sustained any loss that has occurred during the period covered by the insurance contract. |
| Dismemberment – Includes loss of being able to use certain predefined bodily parts; including eyes and limbs due to an accident. |
| Domiciliary Hospitalization – Treatment of patient who has been sent home because of lack of accommodation at the hospital or when the patient is not in a condition to be moved to a hospital; made possible by the recommendation of the doctor or treating physician and determined on the base of the case merit. |
| Double Insurance – If the insurance policy is taken from more than one underwriter where period of insurance, subject matter of insurance and sum insured are same, then this is called double insurance. |
| Dramshop Law – Legal provision imputing negligence to the owners of any business selling liquor in the event an intoxicated person causes damage to the property or injuries to another individual; usually exclusion under general liability insurance plan. |
| Dread Disease Insurance – Insurance cover offering unallocated benefits subject to a maximum amount towards expenditure incurred related with the treatment of certain kinds of diseases like spinal meningitis, poliomyelitis, cancer, and encephalitis. |
| Duty of Assured Clause – Appearing in the institute cargo clauses printed for using with the MAR kind of insurance plan; directs the insured’s attention, his brokers, etc. Towards the duty for taking reasonable steps for averting or minimizing losses recoverable under the insurance policy. Also for ensuring all rights against the carriers and others are adequately exercised and preserved; underwriters agree for reimbursing the insured for reasonable expenses incurred due to compliance with the clause known as “sue and labor” charges. |
| Duty of Disclosure – Positive duty to disclose material facts in an insurance proposal. |
| Dwelling – A dwelling is a home, where someone lives. Houses, apartments, and condos are all dwellings. |
| Dynamic Risk – Any insurance risk resulting from a human decision. |
| E & O – Errors and omissions that are excepted. |
| Each and Every Loss – Excessive loss reinsurance arranged on the “any one event” basis, which every loss arising due to the single event is accumulated and extra recovery effected towards accumulation of such losses in excess of the underlying loss retention of the reinsured; any event of loss defined as 168 consecutive hours and each & every loss during this period is aggregated as stated for the application of EL recovery. |
| Earned Premium – Reinsurance – Premium ceded and included during the year in question along with the reserve for the unexpired risk carried forward or portfolio premium entry after reducing reserve for unexpired risks at the completion of the current year or withdrawn portfolio premium. |
| Earned Premium – For an insurance policy, the part of the premium that relates to an expired period of cover. |
| Earthquake Fire and Shock – Extension of the policy coverage to the standard fire and special perils plan by paying an additional premium; damage or loss occurring to the insured property due to fire or shock or both due to earthquake is covered within such extension. |
| Earthquake Zone – Differentiating between areas that are prone to earthquakes and those locations that are not prone to this phenomenon; offering different rating structures for earthquake-prone locations for procuring coverage under fire policy; tariff advisory committee divides the country in 4 zones; details are available in the fire tariff. |
| Economic Loss – Total financial loss resulting from the death or disability of a wage earner, or from the destruction of property. Includes the loss of earnings, medical expenses, funeral expenses, the cost of restoring or replacing property, and legal expenses. It does not include non economic losses, such as pain caused by an injury. |
| Effective Date – Actual date on which insurance coverage comes into force. |
| Efficient Level of Risk – Amount of risk balance after business or individual pursues activities like internal risk decrease, loss control, or loss financing to an extent where the marginal benefits are equivalent to the marginal costs. |
| Electrical Clause – Clause appearing as component of the general exclusions within the standard perils policy that relieves the insurance company from the liability of any loss or damage occurring due to electrical and/or electronic equipment or the installation resulting from arcing, over-running, electricity leaks, excessive pressure short circuiting, or self heating; the damages to adjacent insured items consequent to such causes is covered under the policy. |
| Electronic Data Interchange (EDI) – Method by which companies or people communicate with their banks, clients and suppliers using computers. |
| Elements of A Negligent Act – The 4 elements injured persons need to show as evidence; existence of legal duty for using reasonable care; failure to perform such duty, injury or damage to the claimant, and proximate cause relation between infliction of damages and negligence. |
| Embezzlement – Fraudulent use or taking of another’s property or money which has been entrusted to one’s care. |
| Employment Practices Liability Coverage – Liability insurance for employers that covers wrongful termination discrimination, or sexual harassment toward the insureds employees or former employees. |
| Endorsement – A written amendment affecting the declarations, insuring agreements, exclusions, or conditions of an insurance policy- a rider. |
| Endorsements – Additional paper (not part of the original insurance contract) that cites certain terms and is attached to the original document becoming a legal part of the contractual agreement. |
| English Jurisdiction Clause – Any condition printed in the MAR form whereby the underwriter agrees to recognize judgements only from courts convened under the English laws; subscribing underwriters may agree for replacing this clause with foreign jurisdiction laws clause. |
| Enrolled Actuary – Individual performing actuarial services for insurance plan and is enrolled with the federal joint board for enrollment of actuaries. |
| Environment (Protection) Act 1986 – Comprehensive umbrella legislation towards the enforcement of measures to protect the environment and coordinating of the activities of the state and national pollution control boards constituted under the air and water acts. |
| Environmental Damage – Injurious presence on or in land, atmosphere, or water course or body, solid, gaseous, thermal, or liquid contaminants, pollutants, or irritants. |
| Environmental Impairment Liability Coverage – A form of insurance designed to cover losses and liabilities arising from damage to property caused by pollution. |
| Environmental Risks – Risks that relate to the release of contaminants in the air and disposal of industrial wastage in water or on land. |
| Erection All Risks Insurance(EAR) – Insurance plan for covering projects that are under construction; provides coverage to all machinery and materials from all kinds of risks, subject to some predefined exclusions; cover is extended for inclusion of civil engineering works related to the project, surrounding property of the insured, and third party liabilities; policy commences on arrival of the first consignment of materials at the location of the site and continues until construction and testing is completed and project commissioning; sum insured represents estimated value of completed project; suitable coverage amounts need to be opted for by the insured for adjoining property and third party liabilities; policy is governed by the tariff. |
| Error, Omission & Alteration Clause – Clause within proportional treaty wordings that provide accidental or inadvertent errors or omissions not prejudicing the treaty and these are to be corrected at the earliest and all required adjustments are to be made. |
| Errors and Omissions Insurance (E & O Insurance) – Insurance that covers liability for errors and omissions, such as incorrect records or accounting. |
| Estimated Maximum Loss (EML) – Used in fire, explosion and material damage insurance policies, it is an estimate of the monetary loss that could be sustained on a single risk as a result of a single perils, which is considered by the underwriters to be possible. |
| Excess – Amount of any loss that is not included in the cover provided (e.g. A loss falling below the excess is not a claim). A deductible on the other hand eats into the cover. This difference only really matters where there is an upper limit on the amount of cover such as reinstatements or an annual aggregate. |
| Excess and Surplus Insurance – Insurance available for covering losses above a specific amount and losses below this amount being covered under standard policy; insurance coverage for unusual or one-time perils that are not covered within the normal policies available in the market. |
| Excess of Loss – In reinsurance, an agreement that requires the reinsurer to bear any loss over a certain stated amount. |
| Exchange Gain – Profit made by an importer if there is an favorable change in the exchange rate. |
| Exchange Loss – Loss made by an importer if there is an unfavorable changes in the exchange rate. |
| Exclusion or Exception – Conditions or circumstances that are specified in the insurance contract under which the insurance policy will not offer the benefits. |
| Exclusions – Specific circumstances or conditions listed within the policy document for which the plan does not provide any benefits or payments. |
| Exclusive Remedy Doctrine – Doctrine within workers compensation plan stating that workers compensation benefits will be the sole and exclusive form of recovery for workers who are injured on the job or suffer from work-related sickness; this doctrine has been eroded through several legal decisions. |
| Exgratia Payment – In insurance, a payment made to settle an issue(such as an insurance claim) but without admitting liability. |
| Expected Claim Cost – Expected value of the losses being distributed for particular group of the insurance plans. |
| Expense Loading – Amount that should be added to the pure premium amount towards expenditures, profits, and margin for possible contingencies. |
| Expense Ratio – The ratio of a company’s operating expenses including acquision costs to premiums written or earned. |
| Experience Rating – Procedure used to determine premium rates for group risk, either partially or wholly based on the experience of the group. |
| Exposure – State when being subject to possible liability due to loss; risk extent as determined by payroll, area, gate receipts, etc; possible loss due to risk caused to the surroundings. |
| Extended Coverage Endorsement – Specific endorsement attached to standard fire policy providing cover due to wind storms, explosion, hail, vehicular damage, riot, smoke, riot due to civil strikes, civil commotion, or aircraft. |
| Extended Reporting Period Endorsement – Added to a claims-made policy of liability insurance to provide the original amount of insurance for a limited period of time. |
| FAC – Inco-term implying free carrier. |
| Face Amount – Amount stated on the face of the insurance policy payable in the event of death or on maturity; does not include any additional amounts payable under accidental demise or special provisions or acquired through application of policy dividends. |
| Facultative – Type of reinsurance in which risks is coded on an individual basis. The coding company can choose whether or not to reinsurer can decide to accept or reject the business. |
| Facultative Obligatory Open Cover – Similar to facultative obligatory treaty with one difference; there is no line limitation in this. |
| Facultative Obligatory Treaty – Agreement under which the ceding party can cede (but no binding) in case of pure facultative placements but the reinsured must accept under the agreement certain share of the specified underwritten risk by the ceding company; treaty has characteristics of facultative cessions as well as obligatory treaties; normally available after surplus treaties and provide automatic reinsurance covers to ceding company after the exhaustion of the surplus capacity. |
| Facultative Reinsurance – A reinsurance arrangement covering a single risk as opposed to a treaty arrangement; commonly used for very large risks or portions of risk written by a single insurer, that are shared among several reinsurers. |
| Facultative-Obligatory Reinsurance – A facultative reinsurance facility with an obligation placed on the reinsurer to accept. |
| Failed Well Insurance – Cover providing compensation to the insured in case dug well fails to provide the specific amount of water; compensation is also paid in case the side walls collapse during the digging process; insurance is available for open wells and bore wells (only new ones). |
| Failure of Brakes – Consequential damages available under insurance plan in case brakes of an insured vehicle fail to perform the necessary function resulting in a road mishap. |
| Fall or Displacement of Building Clause – Provision within the standard fire and special perils policy stating all covers under the plan will be discontinued on the expiry of 7 days of displacement or fall of insured building or part thereof or of the whole or any part of the insured buildings or of any structure that forms part of the insured building; also referred to as “fallen building clause”. |
| Family Coverage – Property and/or personal insurance where any addition to the insured, her or his dependents is covered as insured. people. |
| Family Expense Policy – Policy whereby policyholder and her/his immediate dependents often children and spouse are insured. |
| Family Purpose Doctrine – Concept imputing negligence committed by immediate members of the family while driving family car to the car’s owner. |
| Farmers Package Cover – Comprehensive package insurance benefiting the farmers for covering individual, her/his family members, property (house, animals, animal driven carts, agricultural tractors, etc.) Against all kinds of losses or damages and accidental injuries or demise. |
| FAS (Free Alongside Ship) – Term within the sale contract under which the seller is responsible for placing the goods on the quay along the vessel until when the cargo is seller’s responsibility; transport cost to this point is incurred by the vendor; all further costs and risks are transferred to the buyer beyond this point. |
| FAS – Inco-term meaning free alongside ship. |
| Fatal Accidents Act, 1855 – An act providing in case of demise of an individual due to wrongful act, negligence, or default, an action for damages can be maintained by legal heirs of the deceased person against the party causing the injury; the act abolished the rule of common laws as per the civil action for damages died with the individual to whom or by whom tort was committed. |
| Favoured Reinsurance Terms – Reinsurers at times insist reinsurance treaty terms to be standard for all reinsurers of a treaty in non-reciprocal trading; there must be no discrimination or concessions to few; reinsurers accept share subject to favored reinsurer’s terms. |
| FCA (Free Carrier) – Contract sale terminology where the sellers are responsible for delivering the goods to a carrier named by the buyers at locations specified by them; risks until this location remains with the sellers after which it is transferred to the buyers. |
| FCS Clause – Clause within the marine insurance policy where the insurance company excludes coverage of any loss due to seizure or capture or arrest, restraint, or detriment and consequences thereof or any attempt (except piracy) and from all consequences of hostilities or war-like operations whether prior to or after declaration of the war. |
| FEA Discount – Discount available for the installation of fire extinguishing appliances within the insured premises; ranges from 2.5% to 10% of the premium amount and depend on the installations. |
| FIA – Abbreviation of Fellow of the Institute of Actuaries. |
| Fidelity Bond – Form of protection that reimburses employer for losses caused due to dishonest or fraudulent acts of the employees. |
| Fidelity Exclusion – Provision for burglary and money insurance plans that exclude losses resulting from infidelity of the insured’s employees; provision within professional and liability indemnity policies excluding coverage for the dishonest acts of insured. |
| Fidelity Guarantee Insurance – Commercial insurance that covers misappropriation of funds or other wrongdoing by an employee. It is also called fidelity insurance. |
| Fidelity Guarantee Policy – Insurance plan that reimburses employers from losses resulting due to dishonest or fraudulent acts committed by the employees. |
| Fidelity Policy – A form of protection which reimburses an employer for losses caused by dishonest or fraudulent acts of employees. |
| Fiduciary – A person who holds something in trust for another. |
| Financial Risks – Risks associated solely with finance received or extended; in various forms by an enterprise or individual resulting in the beneficiary of finance not carrying out or unable to carry out the financial obligation/s under the agreement; certain types of financial risks are covered under insurance policies. |
| FIR – First information report logged with the police authorities in case of theft, explosion, or fire at the insured premises or road mishaps involving third parties; one of the claim documents required at the time of lodging third party liabilities under the policies. |
| Fire – A combustion accompanied by a flame or glow, which escapes its normal confines to cause damage. |
| Fire and Allied Perils – Term that conventionally is used for denoting additional perils with fire; lighting, storm, cyclone, tempest, flood, hurricane, inundation, tornado, typhoon, aircraft damage, impact damage, earthquake, implosion or explosion, bush fire, riot, terrorism, strike, malicious, missile testing operations, subsidence and landslide (includes rock slides), and leakage from automatic sprinkler installations. |
| Fire Extinguisher – Instrument using non-combustible substances such as carbon dioxide for putting off fires through deprivation of oxygen. |
| Fire Hazards – Chemical or physical properties of any matter in whatever state that makes it susceptible to fires in different degrees. |
| First Loss Insurance – Type of fire insurance or theft insurance in which the full value of the insured item is declared, but a lower sum insured (at a consequently lower premium). |
| First Party Claim – Claims made by the policy holder to her/his own insurance service provider; contractual claims arising through the insurance contract between the insured and the insurer. |
| Fleet Insurance – Motor insurance policy that covers a group of vehicles from one organization. |
| Floater Policy – Policy under terms of which protection follows moveable properties, covering wherever it may be. |
| FOB (Free on Board) – Inco-term that means free on board. |
| FOB – Related to imports and exports contractual sale agreement; the seller has the responsibility of placing the goods on board the vessel and procuring the bill of lading; all risks prior to this placement is with the vendor; buyer must procure marine insurance for cargo during the journey till it reaches the final destination; in normal practice FOB buyers avail insurance on the cargo from warehouse to warehouse. |
| FOB Insurance – Insurance coverage procured by the seller to protect his or her interest on goods from the time these are dispatched from his or her location and continues until these are loaded on board the vessel and bill of lading is procured. |
| FOR (Free on Rail) – Similar to free on board except it being primarily related to internal trade transactions. |
| Fortuitous Loss – Unforeseen and unexpected loss that occurs as a result of chance. |
| FPA – Free of particular average. |
| Franchise – In insurance, a franchise is an agreed figure below which an insurance company does not have to meet a claim. A loss above the franchise figure is paid in full. |
| Freight – Goods moved on behalf of another; remuneration earned by vessel owner or manager for carrying the goods that includes profits derived from carrying own cargo. |
| Fronting – In insurance, selling certain products with the intension of passing them on to another company. |
| Garagekeepers Legal Liability Policy – Cover for losses that are legally insured resulting from fire or explosion, vandalism or riot, upset to vehicles in his/her care, control, or custody, theft of the entire vehicle, and collision. |
| Garbling Clause – Relates to transit or marine insurance of commodities, such as tobacco, grain, or coffee beans; offers insurer incurring the garbling cost (sifting and cleaning to separate good from the whole) to prevent further damage thereby reducing claims. |
| General Aggregate Limit – Commercial general liability limiting all applicable damages payable for any bodily injuries, personal injury, medical expenses, and advertising injuries except the damages included in product completed operations hazard. |
| General Average – In insurance, a situation in which a loss, resulting from a deliberate act of sacrifice to save other goods, is shared by the insurers concerned (such as the insurer of a vessel and the insurer of its cargo where part of the cargo has been jettisoned-and lost – to save the ship). |
| General Damages – Damages awarded to injured individual for intangible losses that do not readily lend to qualitative measures; commonly known as pain or suffering; general damages are differentiated from special damages that are actually awarded for economic losses; like medical, legal, repairs, loss of income etc. |
| General Exclusion Clause – Clause in the institute cargo clauses 1982 that specifies the excluded risks irrespective of those risks that are covered elsewhere in the wordings. |
| General Insurance Business – Fire, marine, or other miscellaneous insurance business either carried singly or in contribution with one or multiple of these. |
| General Liability Insurance – Coverage related to claims arising from insured’s liability for damages or injuries caused due to property ownership, manufacturing or contracting operations, distribution or sale of products, and machinery operations, and also professional services. |
| General Operating Expense – Admin expenses incurred by insurance companies that exclude commissions paid to the agents and taxes. |
| Geographical Limitation – Territorial jurisdiction available under the insurance cover; personal lines of liability insurance confine accidental coverage within the country unless otherwise specified in the insurance contract; motor vehicle insurance can be extended on request to include locations like Bhutan, Lahore, and Nepal without any additional premium and Bangladesh by paying flat additional premium given in the all India motor tariff. |
| Glass Coverage Form – Commercial property form used for insuring plate glass, ornamentation, lettering, and frames. Replacement for earlier commercial glass insurance forms. |
| Glass Insurance – Protection for loss of or damage to glass and its appurtenances. |
| Golfers Equipment Insurance – Special coverage for non-professional golfers providing cover to golf equipment from accidental damages either in the golf course or while in transit, personal effects of insured against fire and theft in or at any golf facility, and liability of the insured from third party for bodily injury, and property damage while practicing or playing. |
| Good Faith – Basic insurance principle, assured and her/his broker must disclose and truly represent all material facts to the underwriters before accepting the risk; breach of good faith entitles the insurers to avoid the contract. |
| Goods – Merchandise excluding personal effects and/or provisions and stores that are used on board. |
| Goods Carriage – Motor vehicle constructed or adapted for the sole use of carrying goods; any other vehicle not so constructed or adapted when used for transiting goods. |
| Goods in Trust or On Commission – Person holding property of another in trust or commission possesses deemed insurable interest in the property and can avail insurance in his/her name. |
| Grace Period – Specified period after the premium due date during which the insured can pay the premium amount; all benefits and covers under the policy continue during this period. |
| Gramin Personal Accident Insurance (GPAI) – special personal insurance cover available for the benefit of people residing in rural areas; with sum assured per person being Rs. 10,000 at Rs. 5 premium; policy covers risk against death, loss of eyesight or limbs, and permanent total disability due to accident. |
| Grievous Injury – Injury endangering life of an individual or causing the sufferer severe bodily ache or inability to complete regular daily tasks for several days; term is specifically used for hit and run vehicular accidents where specified compensation is payable to the grievous injuries. |
| Gross Loss – Loss incurred by the direct insurer for 100% of any one risk that has been insured by her/him. |
| Gross Negligence – The intentional failure to perform a manifest duty in reckless disregard of the consequences as affecting the file or property of another. |
| Gross Premium – Premium paid by the policyholders. |
| Gross Rate – Sum of pure premium and the loading factor. |
| Gross Vehicle Weight(GVW) – Total weight of the vehicle and load registered and certified by the registering authority as permissible for the concerned vehicle. |
| Group Mediclaim Insurance – Medical cover issued in favor of an enterprise or organization or employer for covering the employees and sometimes even dependents; policies are also issued to clubs or associations for members’ benefits; essential requirement for group policy include common relationship among insured persons, and central administration point for the policy scheme. |
| Group Personal Accident Insurance – Personal accident cover issued in favor of an enterprise or organization or employer for covering the employees and sometimes even dependents; policies are also issued to clubs or associations for members’ benefits; essential requirement for group policy include common relationship among insured persons, and central administration point for the policy scheme. |
| Guaranteed Renewable Contract – Health insurance policy wherein the company guarantees renewal for the life of the assured or until s/he reaches a certain specified age, which is generally 65 years. |
| Hague Rules – Following international maritime law conference in brussels in 1922, a set of rules that were agreed to establish the rights and immunities of the carriers related to the carriage of goods by sea; many countries agreeing to these rules have incorporated these under statutory acts like carriage of goods by sea act 1924. |
| Hail Risk Insurance – Insurance cover available against hail storm damages to crops provided as part of the crop insurance cover. |
| Hand Appliances – Any portable fire extinguisher device comprising chemicals to put out fires. Hand appliances are basic needs for risks that are considered for availing discount in the fire premium rating under the standard fire and special perils policy. |
| Hard Market – Market situation where competitive pricing is at the minimum charged by the companies; the premiums for covering underwriting losses to avoid insolvency and boosting capacity often related to sharp declines in capacities. |
| Hazard – Condition/s that create or enhance the risks of losses due to any perils. |
| Hazardous Goods – Goods (either solids, liquids, or gases) susceptible to the risk of fire in different degrees as per their physical properties; hazardous goods can be classified as i, ii, iii, and iv and are accordingly rated for the purposes of insurance within the standard fire and special perils policy. |
| Hazardous Sports – Related to personal accident plans, sport activities that have higher risks like horseback or vehicle racing, mountaineering, skiing, big game hunting, river rafting, winter sports, ballooning, ice hockey, hand gliding, etc. People engaged in such activities are categorized as high risk groups and need to pay higher premium when proposal is accepted by insurance companies. |
| Hazardous Substance – Related to public liability insurance act 1991 meaning list of chemicals with categorized quantities as hazardous substances and published as notification by the central government; the act provides for public liability insurance for purposes of providing immediate relief to the affected person/s by accident occurring during the handling of hazardous substances. |
| Health Insurance – Protection from financial losses due to accidental bodily injury or illness; various heads included like accident, disability income, medical expense, and accidental demise and dismemberment insurance. |
| Heating and Sweating – Former is peril existing with respect to cargo prone to heating through spontaneous combustion (coal or oil cakes) in bulk quantities; sweating relates to water damages caused due to condensation of water in the ship or container hold in conditions of various weathers or atmospheres. |
| Heating or Drying Process – Process undertaken in manufacturing where some property can be heated and dried to eliminate water content; any damage or loss to the same due to overheating or drying is not covered under the standard fire and special perils policy. |
| Hit and Run Motor Accident – Accident that arises from the use of motor vehicle/s where the identity is not certainable irrespective of reasonable efforts for this purpose. |
| Hold-Up – Robbery involving violence or threat of violence; risk that is covered under the standard burglary insurance plan. |
| Honey Bee Insurance – Coverage available for hives and/or bees colony belonging to cooperative societies against accidental damages or losses; claim settlement is according to agreed value representing cost of hive and bee colony cost that is attached to the policy as a valuation table. |
| Hospice – A health care organization that provides humane, dignified care for dying patients. |
| Hospital Cash or Confinement Indemnity Insurance – Cover available for fixed compensation on daily basis during the treatment period in nursing home or hospital for any sickness, injury, or ailment against the regular mediclaim policy that provides reimbursement of the actual expenses incurred for the treatment. |
| Hospitalisation – Admission of the patient in nursing home or hospital for treating injury, disease, illness, or sickness. |
| Hostile Fire – Fire that is not confined to normal bounds and spreads beyond the habitat; example fire due to gas stove spreading to nearby items resulting in a larger fire; hostile fire is coverable under policies that extend to cover fire risks. |
| Hot Testing – Related to project insurance includes operational tests that involve parts checking, elements, and/or production lines of the insured property under partial or full load and normal stipulated operating conditions involving use of feedstock or other materials needed for normal processing and other media for load simulation; in electrical power stations hot testing implies checking after connection to grid or other load circuit of electrical generating, transforming, converting, or rectifying equipment. |
| Housebreaking – Individuals commit house breaking when they trespass and their entries affect the property; commit any offence, or having committed offence s/he quits the house such exit and entry being made in 6 ways described in penal code. |
| Householders Comprehensive Insurance – Insurance package designed for homeowners with broad range of liablility and property coverage relating to events at home and the outside. |
| Hull Insurance – Insurance of a vessel and its machinery. A policy is generally taken out during construction which covers the ship for the whole of its useful life. |
| Hurricane – Tropical storms marked by very low barometric pressure and circular winds at velocity exceeding 125 kilometers per hour and more. |
| Hurricane Insurance – Component of the perils named “storm, inundation, cyclone, flood, typhoon, tornado, hurricane, tempest”, which is in-built within the cover under the standard fire and special perils plan; this group of perils can be opted out by the holders in order to reduce premium expense. |
| Hut Insurance – Insurance cover for dwelling huts in rural locations constructed using finance assistance from banks or cooperatives or government institutions, cover available against fire, flood, earthquake, and inundation, malicious damage, storm, terrorism or riot, impact damage, etc.; insured value of rs 6000 per hut. |
| Hydrant System – Large discharge pipe system with valves at different locations for drawing water from the main; installation of the system along with existence of hand appliances will procure discount on the rate of premium under the standard fire and special perils policy. |
| Hypothecation Agreement – It is not permissible for insurance companies to issue policies in joint names of pledge and registered owner of vehicles; coverage should be issued in registered owner’s name only and pledges’ interest is protected by using the appropriate endorsement. |
| Identity Theft Insurance – Coverage for expenses incurred as the result of an identity theft. Can include costs for notarizing fraud affidavits and certified mail, lost income from time taken off from work to meet with law enforcement personnel or credit agencies, fees for reapplying for loans and attorney’s fees to defend against lawsuits and remove criminal or civil judgments. |
| Impact Damage – A part of the cover under the standard Fire and Special Perils policy. Cover is against loss or damage to the insured property caused by impact by any rail/road vehicle or animal by direct contact not belonging to or owned by a. The Insured or any occupier of the premises or b. Their employees while acting in the course of their employment. |
| Implied Warranty – An implied warranty is not expressed in the policy specifically but which is understood by both parties to be forming part of the contract and binding on both. |
| Implosion – Bursting of a property inwards due to a sudden decrease in pressure. Loss/damage to the insured property due to implosion is covered under the standard Fire and Special perils policy. |
| Important Notice – It is customary to attach a red line clause called as important notice to the certificates and policies of insurance to guide the insured regarding claims procedure. This clause deals with the duty of the insured to minimise losses and preserve recovery rights, arrangement of survey and documentation of the claims. |
| Inchmaree Clause – Part of the insurance coverage granted under the Institute Hull clauses which relates to loss or damage to the insured vessel caused by negligence of master and/or crew and other additional perils such as loss or damage to the hull and machinery caused by bursting of boilers, breakage of shafts or any other latent defect. |
| INCO Terms 2000 – Internationally accepted and employed terms for contracts of sale, first published by the International Chamber of Commerce (ICC) in 1936. They were revised 7 times since then. The latest revision, known as “Incoterms 2000”, came into force on January 1 2000. |
| Incurred Loss – Sum total of the amount of all claims reported and paid during the policy period and the estimated amount of all claims reported during the policy period but remaining unpaid. |
| Incurred Loss Ratio – The percentage of losses incurred to premiums earned. |
| Incurred-But-Not Reported Reserves (IBNR) – Liability account on an insurer’s balance sheet reflecting claims that are expected based upon statistical projections but which have not yet been reported to the insurer. |
| Indemnification – Compensation to the victim of a loss, in whole or in part, by payment, repair, or replacement. |
| Indemnitee – Recipient of an indemnity payment. |
| Indemnitor – Provider of an indemnity payment. |
| Indemnity – Legal principle that specifies an insured should not collect more than the actual cash value of loss but should be restored to approximately the same financial position that existed before the loss. |
| Indemnity Period – A term related to the consequential loss insurance covers. Indemnity period is the period during which the business of insured will be affected either totally or even partially arising out of the damage to the business property by an insured peril. This period is different from the period of insurance under the policy. While the commencement of the indemnity period will be sometime during the period of insurance the termination of the same may go beyond the date of expiry of the policy. |
| Independent Survey Report – A report of inspection, of a property proposed for insurance or of a property or an interest which is the subject of an insurance claim, by an independent surveyor. |
| Industrial All Risks policy – A comprehensive insurance cover introduced mainly for the benefit of industrial houses. Cover is against all accidental loss or damage to all fixed or moving assets like building, machinery, stocks etc. With named exclusions. |
| Infidelity Exclusion – In relation to money (in transit) insurance, loss of money to the insured caused by the act of fraud/dishonesty of its employee, is not payable unless discovered within 48 hours of their occurrence. However insurers would agree to delete this exclusion on payment of extra premium. |
| Infidelity of Employee – In relation to fidelity guarantee insurance, or to that section of any other policy which deals with fidelity guarantee coverage, refers to financial losses to insured caused by an act of infidelity or dishonesty on the part of a covered employee. |
| Information Technology Insurance Policy – Policy providing coverage to information technology companies or organisation against their civil liability. |
| Inherent Vice – A term relevant in Marine Cargo insurance. This is a quality inherent in a cargo which produces damage to the cargo without the involvement or impact of an outside agency. Inherent vice is not a risk but is only an inevitability. Policies of marine insurance, even on all risks basis exclude losses caused by inherent vice. |
| Inland Transit Clause A – This clause is attached to policies covering transportation of goods by road or rail. This insurance covers the goods against all risks of physical loss or damage. However, it does not cover all losses. The policy is subject to exclusions like, inherent vice, willful misconduct of the insured, ordinary losses, delay and insufficiency of packing. |
| Insurable Interest – A condition in which the person applying for insurance and the person who is to receive the policy benefit will suffer an emotional or financial loss, if any untouched event occurs. Without insurable interest, an insurance contract is invalid. |
| Insurable Risk – Risk against which insurance cover can be obtained by somebody with an insurable interest in it. |
| Insurance – Contract under which the insurer agrees to provide compensation to the insured in the event of a specified occurrence, for example, loss or damage to property. In return, the insured pays the insurer a premium, usually at fixed intervals. |
| Insurance Repository – “Insurance Repository” means a company formed and registered under the Companies Act, 1956 (1 of 1956) and which has been granted a certificate of registration by Insurance Regulatory and Development Authority (IRDA) for maintaining data of insurance policies in Electronic form on behalf of Insurers. |
| Insured – The person or company that holds an insurance policy i.e., a policy holder. |
| Insured Peril – Peril that is specifically stated in an insurance policy as being covered or included. |
| Insurer – Insurance company or other person or company that agrees to indemnify someone against particular risks. Usually as defined in an insurance policy and for an insurance premium. |
| Insuring agreement – That part of an insurance contract which sets forth the type of loss being covered by the policy and the parties of the insurance contract. |
| Insuring Clause – The clause in an insurance contract which sets forth the type of loss being the policy and the parties of the insurance contract. |
| Intangible Assets – They are abstract commodities, which cannot be seen or perceived through the senses, for e.g. Goodwill, honesty, integrity, etc. |
| Jacket – Outer covering comprising insurance policy; normally furnishes brief information of coverage, exclusions, terms and conditions, etc. Related to the coverage. |
| Jettison – Hazard covered under a marine cargo policy which is defined as the throwing overboard of cargo to preserve property from loss. |
| Jeweler’s Block Insurance – Coverage designed to protect the insured stock property left with insured for repair or other purposes, and the insured’s interest in and legal liability for property on consignment from others in the jewelry trade. |
| Jeweler’s Block Policy – Insurance plans for jeweler’s needs; cover is available for stock-in-trade at the jewelers’ premises, stock in custody of employees, partners or other insured agents; stock in transit through insured post parcel, air freight, courier or angadia, office furniture, fittings, fixtures, and fittings in the premises against fire and other perils, theft, and burglary. |
| Joint Cargo Committee – Committee formed for deliberating issues related to cargo insurance and making recommendations for uniform implementation. |
| Joint and Several Liability – A legal principle that permits the insured party in a tort action to recover the entire amount of compensation due for injuries from any defendant who is able to pay, regardless of the degree of that party’s negligence, once any liability by that defendant has been established. |
| Key Person Insurance – Insurance to cover the health of an essential employee (a key person) in a company. This form of insurance covers the cost of replacing such personnel at short notice by equally qualified temporary staff and any loss of profits incurred in the meantime. |
| Kick – Terminology used in energy risks referring to entry of oil, gas, water, and other fluid formation in bore well; occurs due to pressure exerted by column of drilling liquid is not sufficiently high for overcoming pressure exerted by fluids in drilled formation; failure to kill well or control the kick can result in blowout. |
| Kidnap-Ransom Insurance – Insurance cover available for providing payment within the specified time period in the policy demanded by the insured’s kidnappers. |
| Kill – Energy risk term referring to (i) related to drilling associated with prevention of blowout by using the appropriate preventive actions (ii) related to production stopping the well from production of oil or gas to enable reconditioning of the well. |
| Kindred Perils – Perils of the same type; burglary or robbery, hurricane or storm. |
| Knock-for-knock Agreement – In motor insurance, agreement between a group of insurers that no question of responsibility will be discussed and that each company will pay for damage to its own policyholders’ vehicles, so long as the policyholder is covered for such damage. |
| Knot – Ship’s speed unit; a nautical mile (often calculated as 6080 feet – 1.151 statute miles or 1853 meters) per hour. |
| Known Loss – Loss about which insured and/or insurance company is aware when the insurance is effected. |
| Kutcha Construction – Buildings with walls and/or wooden planks, grass, bamboo, hay, plastic cloth, thatched leaves, canvas, asphalt cloth, tarpaulin etc. Such constructions attract additional premium rate under the standard fire and special perils insurance policy according to the All India Fire Tariff. |
| Label Clause – Clause related marine cargo insurance; relates to canned or similar kind of goods that are labeled for identification of products where such labels may be damaged due to contact with water or other cargo insurance company’s liability is restricted to cost of repackaging and relabeling as per the clause. |
| Lag – Period elapsing between claims actually occurring and when paid in actual. |
| Landed But Missing – Situation where import or export cargo can be lost after landing at the destination port due to theft, over issue or incorrect carriage to another location; in all these cases port authorities will after some search issues certificate known as landed but missing or c certificate. |
| Landing Remarks – Remarks made by the dock authorities in their records displaying marks and numbers, condition, weight, etc., of landed goods; insurance companies need an extract of these records with respect to claim for loss or damage to insured cargo as evidence for the stage at which loss to cargo may have occurred. |
| Larceny – The unlawful taking, carrying loading away of another person’s property. |
| Larceny-Theft – Unlawful taking, leading, carrying, or riding away with another individual’s property. |
| Large Losses Information – Information on large losses that is provided to reinsurance companies for the purpose of reviewing performance of treaties; either proportional or excess of loss treaty; related to proportional treaties, loss is considered “large loss” when the amount is more than “cash loss limit” provided in the wordings; relating to excess of loss reinsurance loss is considered large loss when it is over 50% of underlying limit. |
| Latent Defect – Terminology used for referring to hidden flaws or defects within the structure of machinery or ship that is not readily discoverable by competent individual/s using reasonable skills in ordinary inspection; any damage or loss caused due to latent defect can be recovered under marine hull insurance plan providing coverage according to itc (hull) or ivc (hulls). |
| Law of Large Numbers – Concept that the greater the number of exposures, the more closely will actual results approach the probable results expected from an infinite number of exposures. |
| Lawful Adventure – Implied warranty related to marine insurance contracts to the effect whereby the adventure must be legal. |
| Lay up Warranty – Hull plans covering minor vessels like fishing and sailing boats carry “lay up warranty” offering the insured ship be laid up out of commission during specific time period that is winter and monsoon months; vessels can be laid on mud, afloat, or hard. |
| Layout Plan – Representation of the horizontal shape of building; ground floor shape is always taken and by including additional details plan is built-up to incorporate all features of the different storeys and the roof; plans comprise concise and clear form of important matters that cannot be covered in the inspection report. |
| lay-up returns – in marine hull insurance, scale of premium refund agreed by international marine insurance market at the time when insured ship must be laid up during the insurance duration; as risk to the insurance provider during this period is less compared to navigational risks return of premium is allowed by the insurance company during this laid up duration; return on premium is subject to certain terms and conditions imposed by the insurance company. For motor insurance, if automobile is laid up in garage risks covered with motor comprehensive insurance policy are limited to burglary, fire, or theft; which is why some portion of the premium is refundable as per the provisions of all India motor tariff. |
| LCR – Largest claims reinsurances; method more appropriate for liability reinsurances where statistical survey of larger losses taken on last 5 years and prescribed limit of the largest loss fixed so that reinsurance companies are liable to pay losses that are over this limit. |
| Leakage From Automatic Sprinkler Installations – Accidental leakage or discharge of water from automatic sprinkler installation arising from damage to sprinkler head due to impact from certain object or heat from some source/s other than fire resulting in sprinkler head to operate; damage or loss to insured property from such leakage is covered under standard fire and special perils insurance plan. |
| Legal Liability – Financial liability imposed under civil laws towards third party/ies. |
| Legal Liability Insurance Policy – Insurance cover providing indemnity to the insured with relation to financial consequences of legal liability; when such liability arises under civil law damages are payable; in addition there may be certain legal costs awarded against insured and defense of the claim that are reimbursed under the policy. |
| Legality of The Contract – An essential component for any contract to be legally valid; applicable to insurance contracts; content in the contract should be legal. |
| Letter of Indemnity – In case original policy is lost by the claimant, letter of indemnity is procured from her or him by the insurance company to the effect that if subsequently another individual presents any claim on the company with original policy, s/he will reimburse the claim amount paid and also hold the insurance company harmless for effecting settlement with her or him without producing the original policy; relevant to marine insurance due to free assignment-ability. |
| Liability – A duty or contract to fulfill an obligation to another person or organization. |
| Liability Insurance – Portion of an insurer’s balance sheet which denotes legal obligations of the company, including anticipated future payments of losses covered under policies issued. |
| Liability Limits – Sum or sums as stipulated in the insurance contract up to which the insurer needs to meet the claims made by the insured. |
| Liability of Carrier (Carriage By Sea) – Under affreightment contract, carrier is obliged to supply the ship that is cargo and sea worthy; in addition to providing competent crew to manage the ship he must carry, care, and deliver the cargo at its destination in same good condition when delivered to him; if due to account of failure of the carrier to discharge his obligations cargo is damaged, he is liable to reimburse such loss; vessel owner’s liability towards cargo is limited; carrier’s liability is insured through p&i clubs and not within the regular marine insurance business segment. |
| Liability Without Fault – Principle on which basis workers compensation is calculated; holding the employer absolutely liable for occupational injuries or illness to workers irrespective of fault. |
| Liability – Any legally enforceable obligation. |
| Lien – The right to possession of property until such time that an outstanding liability has been repaid. |
| Lift (Third Party Liability) Insurance – Insurance plan for owners of passenger lifts for taking liabilities arising from usage and operations of the lifts; plan provides indemnity for legal liabilities of insured for paying compensation to 3rd parties for loss of life or bodily injuries or damage to third party property. |
| Light Motor Vehicle (LMV) – Transport vehicle or omnibus whose gross vehicle weight of either tractor, motor car, or toad roller, unladen weight does not exceed 7500 kilos. |
| Lightning – Flash of light in the sky caused due to atmospheric electricity discharge from one cloud to another or between earth and cloud; it may result in crevices in buildings or fire damages; it is a peril covered under fire as related to standard fire and special perils policy. |
| Limit for Any One Loss – Maximum liability amount of the insurance company under the policy for any one kind of loss or series of losses due to a single event. |
| Limit of Liability – Monetary limit to which insurance company or reinsurer is liable for single risk; when relating to reinsurance is expressed either as sum insured basis or probable maximum loss basis. |
| Limit of Loss With Reinstatement Provision – In excess of loss reinsurance treaties there exists a limitation to aggregate losses that are payable under the period of coverage by the reinstatement provision; if the limit is exhausted prior the expiry date xl cover is deaden prior to expiration. |
| Limit Per Accident – Maximum liability of the insurance company for all claims arising from one accident. |
| Limit Per Bottom – Maximum limit to which single shipment is covered under the open cover by the insurance company; limit per bottom clause appears in all open coverages for exports and imports. |
| Limited Policy – Contract covering only certain kinds of accidents or diseases. |
| Lloyd’s of London – Incorporated association of insurers that specializes in marine insurance. Formally, established by Act of Parliament in 1871, the Corporation developed from a group of 17th- century underwriters who met at Edward Lloyd’s coffee house in London. |
| Loading – The amount that must be added to the pure premium for expenses, profit and a margin for contingencies. |
| Long Term Care Insurance – Coverage that, under specified conditions, provides skilled nursing, inter-mediate care, or custodial care for a patient in a nursing facility or his or her residence following an injury. |
| Long-Term Disability Income Insurance – Insurance cover issued to employer group or individual for providing reasonable replacement of part of employee’s earned income lost due to serious and prolonged sickness or injury during normal work. |
| Loss Adjustment Expense – Expenditures incurred during the process of defending, paying, and evaluating claims. |
| Loss Avoidance – A risk management technique whereby a situation or activity may result in a loss for a firm is avoided or abandoned. |
| Loss Control – Any conscious action intended to reduce the frequency, severity, or unpredictability of accident loss. |
| Loss Expense – Allocated – Handling expenditures like adjuster fees or legal charges paid by insurers for settling claim/s that are definitely chargeable to the specific claim/s. |
| Loss Exposure – A potential loss that may be associated with a specific type of risk. |
| Loss of Profits Insurance – Type of insurance that provides cover against loss of trade and profits resulting from some disaster such as a fire. In the latter case the policy would typically pay a business the equivalent of the expected net profits lost while repair work and restocking were carried out, plus salaries, rates and rent due in that period. |
| Loss Payable Clause – Means of protecting a mortgagee’s interest in property by directing the insurer to make a loss payment to the mortgagee in the event of a loss. |
| Loss Prevention – Any measure which reduces the probability or frequency of a particular loss but does not eliminate completely all possibility of that loss. |
| Loss Ratio – In insurance , the value of all claims expressed as a percentage of total premium for a period. The figure is used as a guide to the profitability of the business when considering rates. |
| Loss Reserve – The amount set up as the estimated cost of a claim. |
| Loss – The occurrence of an event for which insurance pays. |
| Losses Discovered or claims Made Basis – Term related to excess of loss reinsurance treaties implies all discovered losses that are reported or made during the period of treaty irrespective of date of inception of the original policies or the occurrence; such cover may sometimes be used when there is difficulty in determining the precise date of the occurrence. |
| Machinery Breakdown Insurance (machinery insurance) – Insurance cover for plant and machinery providing protection against all types of accidental mechanical and electrical breakdowns because of internal or external factors. |
| Malicious Damage – Deliberate damage or destruction of insured property or any part of it by wrongful act of an individual or individuals; cover against malicious damage is covered under the standard fire and special perils policy as component of riot, strike, malicious and terrorist damage cover; such coverage is also available under marine cargo insurance and inland transit insurance. |
| Malicious Damage Clause – Clause published by institute of London underwriters for using in cargo insurance subject to institute cargo clauses b or c; adds risks of malicious acts, sabotage, or vandalism to the cargo policy. |
| Malpractice – Improper conduct of professionals during performance of his or her duties either intentionally or carelessness or ignorance; unskillful or negligent performance where professional skills are mandatory. |
| Malpractice Insurance – Professional liability cover-age for physicians, lawyers, and other specialists against suits alleging negligence or errors and omissions that have harmed clients. |
| Manifest – Statement prepared by ship’s master of the cargo being carried in the ship, document is used for comparison in the event of short landing of cargo either in totality or partially or details of all cargo in the event of complete destruction of the vessel due to maritime peril; copy is retained on board for identification of cargo if the need arises. |
| Manual Rate – Premium rate developed for group insurance cover from the standpoint of the company’s standard table generally referred to as rate manual or underwriting manual. |
| Manufacturers Stocks – Comprises raw materials, finished goods, and stock in process. |
| Manuscript Insurance – Cover suitable for specific requirements of an insured when standard policy is unable to meet these needs. |
| MAR Policy – Market terminology for marine insurance policy used by Loyds and London company market; basic form of contract where conditions agreed by the insurance providers subscribing to the marine insurance contract are attached. |
| Margin Of Solvency – The total assets of an insurance company must exceed its liabilities (other than share capital) by a relevant amount, known as the margin of solvency. |
| Marginal Well – Related to energy risks, ship that nears depletion of the natural resource to such an extent that profit from continued production is doubtful. |
| Marine 50/50 Clause – Special clause related to project insurance plans where marine portion is not insured with the same company; clause provides the insured must undertake inspection of all packages comprising project materials when these arrive on site for any possible damages sustained to these while in transit as these may have been excluded from project insurer’s liability; further provides that in case of such inspection/s not being possible immediately at the time of arrival and damages are discovered later when the cargo is taken for erection liability for these damages is to be shared 50-50 between the marine cargo insurance provider and insurance company providing erection all risks policy. |
| Marine Cargo Insurance Policy – Insurance related to merchandise and/or goods in transit from one location to another by sea, rail, air, road, or registered post under the relevant carriage contract. |
| Marine Clause – Clause appearing as one of the general conditions within the standard fire and special perils policy; by this clause insurance company is not liable for damages or loss to insured property in case the property at the time of the accident resulting in loss is covered under marine policy that includes peril that caused the damage/loss except for excess over the recoverable loss under the marine insurance policy. |
| Marine Hull Insurance – Insurance offered to ocean going steamers and other ships; hull insurance offers cover to the hull and machinery of the vessel and the materials and outfit and stores and provisions for officers and crew; policy also provides coverage for liabilities; plans issued for covering freight losses to owners and disbursements (amounts spent by vessel owner for fitting out the ship including stores and provisions); further policies are issued for covering vessels under construction. |
| Marine Insurance Act, 1906 – Act came into being in the united kingdom on 1st january 1907 and codified the laws related to marine insurance and now forms the basis of marine insurance principles; Indian counterpart of this act is the marine insurance act, 1963. |
| Marine Insurance Certificate – When open cover is issued for providing automatic and continuous insurance protection to regular importer or exporter engaged in international trading is expected to declare details of every shipment coming within the jurisdiction of open cover as and when the shipment would occur and particulars are available; as open cover is an agreement between insured and insurance company and not stamped document, insurer will issue particular stamped certificate against every declaration after gathering relevant premium on the individual declarations; at times insurance companies provide stamped policy for individual declaration instead of the certificate and this document is legally valid for any legal purpose. |
| Marine Insurance – Insurance of ships and their cargoes which provides indemnity for property loss, damage and injury to third parties. Marine losses arise in four areas- Hull, Cargo, Freight & Liability. |
| Maritime Conventions Act, 1911 – Act providing that in case of collision between two ships the amount of blame for the respective vessels involved in collision must be fixed in order that the liability of one vessel to other can be accurately assessed; does not regulate personal injury liability or loss of life. |
| Maritime Fraud – Occurs when one or more of several parties in any transaction connected with maritime adventures, acting in collusion, unjustly or illegally in procuring money or goods from another related to in the carriage, financial obligations, and trade mainly in the form of cargo thefts, scuttling of ships, frauds in chartering, or documents frauds. |
| Market Value – Value determined for similar property that could be sold or purchased in the local markets; for insurance industry market value is determined post deduction of the appropriate value for the depreciation based on its age, use, maintenance, and wear and tear from the current value. |
| Market Value Clause – Provision used for property damage insurance covering some risks that obligates insurance providers in case of loss to pay the established cash selling price of damaged or destroyed stock instead of the actual value providing by the standard fire policy. |
| Master Policy – Policy issued to employer or trustee or society or association for the establishment of group insurance policy for the designated members within an eligible group. |
| Material Damage – Physical damage to tangible property, such as stocks, building, automobiles, furniture, machinery, household items etc. That result in decreasing the intrinsic value of the said property. |
| Medical Examination – Examination given by qualified physicians for determining insurability of applicants; medical exam is also used for determining whether insured claiming disability is actually disabled. |
| Medical Malpractice – Inaccurate treatment or care by medical professional, hospital, or other healthcare service providers. |
| Minimum Premium – Smallest premium amount that insurance providers will accept for writing specific policy or bond for the pre designated time period. |
| Minor – A person under the age of 18, who cannot legally conduct certain transactions purchase certain goods. |
| Miscellaneous Expenses – Expenditures related to hospital insurance, charges (excluding room charges), and board like x-ray, medications, lab fees, and other ancillary charges. |
| Misrepresentation – A false, incorrect, improper, or incomplete statement of a material fact, made in the application for an insurance policy. |
| Mode of Premium Payment – Frequency of payment of premiums, can be monthly, quarterly, half yearly, or annual. |
| Moral Hazard – The risk that an insured may attempt to take an unfair advantage of the insurer, for example by suppressing information relevant to the assessment of risk or by submitting a false claim. |
| Multi-Peril Policy – Package plan that offers protection against number of different perils; multi-peril policies are not necessarily multiple lines of products since combined risks may be within one line of insurance. |
| Mutual Insurance Company – An insurance company in which ownership and control is vested in the policyholders and a portion of surplus earnings may return to policyholders in the form of dividends. |
| Named Insured – Industry, individual, organization, or firm in whose favor and name the policy is issued. |
| Named Peril – Coverage in property policy that provides protection against loss from only perils specifically listed in the policy. |
| Named Perils Policy – Policy where the perils against which cover is granted is listed; insurer is liable for making good losses incurred due to these named perils. |
| National Association of Insurance Commissioners (NAIC) – Association of insurance commissioners in different states for promoting national standardization in insurance regulation. |
| Nationality of Vessel – Nationality of vessel is critical to the insurance company especially when the ship sails under “flag of convenience” as the owner would not prefer to extend the coverage on the shipped cargo through these vessels and insert the warranty to the open cover or policy. |
| Natural Losses – Damages or loss caused due to natural vagaries like hurricane, storm, earthquake, lightning, etc. |
| Natural Resources – Potential and actual forms of wealth provided by nature like oil, coal, arable land, and water power. |
| Navigational Limits – Limits prescribed by the port authorities and director general of shipping with respect to area of operating the vessels that depends on factors like size, type, and nature of the ships; insurance policies also fix area limits for operation of the ships based on their uses. |
| NCDRC – National consumer disputes redressal commission; complaints can be filed with NCDRC by any aggrieved insured against the insurance company when the claim amount is over inr 20 lacs; territorial jurisdiction of the commission is entire the country, appeals against the orders of any state consumer disputes redressal commission can also be filed with this authority. |
| Neon Sign Insurance – Insurance cover for damages or loss to neon sign installations by any external accidental reasons or theft, fire, explosion, or lightning; insured’s liability to 3rd parties due to accidental damage to insured neon sign is also covered with this plan. |
| Net Loss – Residual loss to the insured after considering realization from salvage and/or recoveries from 3rd parties but this salvage and recoveries are not considered net of expenditures incurred for their realization. |
| Net Premium – Portion of the premium that is designed to provide coverage for benefits or losses payable under the insurance policy; but not various expenses; part of this premium is retained by the office after deducting the expenses for management and includes commission paid to agents. |
| Net Premium Written – Total premium written by any ceding firm after reducing premium ceded to the reinsurance company. |
| Net Present Value – The present value of the cash inflow minus the present value of the cash outflow. |
| Net Profit – Net trading profit after excluding capital receipts and accretions and outlays that are chargeable towards capital; is determined after providing for standing charges but before deductions of taxes; loss of profit plan provides coverage for loss of net profit and insured standing fees during the time of interruption to the production resulting from damage in insured premises due to insured peril/s. |
| Net Retention – Capacity that insurance companies put forth for retaining risks to its own account without any need for reinsurance |
| Net Tonnage – Cargo and/or passenger accommodation expressed in terms of cubic measurements depending on 100 cubic feet equaling one net registered ton. |
| Net Worth of The Company – Indicating excess of assets over liabilities of the organization that in turn implies sum of preference and equity capital and free reserves such as general reserves of the firm. |
| New Business Clause – Special clause included to specification in loss of profit insurance plan; when insurance is arranged for new business where no historical performance numbers are available the clause amends definitions of gross profit rate, standard turnover, or annual turnover for expanding turnover from start of business until date of damage for giving proportionate figures for 12 months. |
| No Cession Without Retention – Condition in reinsurance contract that states ceding company should retain some portion of the risk and reinsurance the remaining; contract will not permit reinsurance for one hundred percent of the risk/s; primarily acts as a safeguard to the interest of the reinsurer for ensuring bad risks are not completely assumed by the reinsurance company. |
| No Claim Bonus – Reduction as a percent in the manual or prospectus premium while renewing the policy depending on favorable claim experience during the previous year or policies for same insured property against same risks. |
| No Claim Refund – Part of agreed premium in the policy that must be refunded to the insured in case of no claim being paid or reported in the entire policy duration; customary for insurance companies to link it with the policy renewal for ensuring renewal without gaps. |
| No Fault Liability – Claimant does not require proving that injury, death, or damage has occurred due to negligence, wrongful act, or default of an individual; relief provided under these acts are under “no fault liability”; motor vehicle act with regards to road accidents, public liability insurance act, and workers compensation act. |
| No Known or Reported Loss – Condition sometimes stipulated by insurance and/or reinsurance providers that base the acceptance of proposals subject to no reported or known loss for subject matter proposed for insurance or reinsurance on the acceptance date. |
| Nominee – Institution, firm, or individual mentioned in accident insurance plans to be the beneficiary of the benefits in case of demise of the insured due to an accident. |
| Non Fare Paying Passengers – Provision within motor insurance commercial vehicles plans for covering in respect to commercial automobiles that are unauthorized to carry fare paying passengers or individuals related to specific journey to travel on paying an additional premium amount. |
| Non Hazardous – Physical or chemical properties of matter in whichever state that presents no undue exposure to the peril in question; normally premium rates are lowest for such goods. |
| Notice of Loss – Written notice of losses incurred by insurance companies as stipulated in the conditions of the insurance plan. |
| Obsolescence – Procedure whereby the property becomes unusable not due to physical deterioration but due to modifications outside the property, like technological or scientific advances. |
| Occupancy – Type and character of the usage of the property in discussion. |
| Occupancy and Fire Rates – Direct relation between use of premises that it is put to and the possibility of its exposure to fire; occupancy of building is primary factor for determining the fire cover premium rate. |
| Occupational Disease – Disease contracted due to exposure to certain harmful conditions on the job; coverage for these is available under workers compensation plan. |
| Occupational Hazard – Occupations which expose the insured to greater than normal physical danger by the very nature of the work in which the insured is engaged and the varying periods of absence from occupation, due to the disability, that can be expected. |
| Occurrence – An accident, including continuous or repeated exposure to substantially the same general, harmful conditions, that results in bodily injury or property damage during the period of an insurance policy. |
| Occurrence Basis Policy – Liability insurance plan covering claims that arise due to any event/s during the policy duration irrespective of when these are filed. |
| Occurrence Limit – Maximum liability of the insurance company of all claims that are related to the occurrence of a single event. |
| Off Duty Covers – Personal accident insurance coverage for individuals during restricted hours when s/he is not at work or on official duty; premium charged for such policy is 50% chargeable for 24-hours coverage. |
| Offer and Acceptance – An essential element in contracts for making these legally binding; applies to insurance contracts too; contract is completed by the acceptance of one party of an offer made by the other party. |
| Open Cover – Agreement where the assured undertakes to declare each item that is within the scope of the coverage in the order in which the risks are attached; at the time of concluding the contract insurance company agrees to accept all valid declarations to pre-agreed limit for every declaration; it may be open for certain period or forever based on the cancellation clause |
| Operative Clause – Defines the class and nature of business covered by a specific reinsurance treaty. |
| Overage – Additional chargeable premium on cargo open cover declaration due to the carrying vessel. |
| Overhead Expense Insurance – Special health insurance plan designed for helping the offset of overhead expenditures like rent, utility bills, employees’ salaries, auditors’ fees incurred during disability; monthly payments during this period is not fixed as an amount of indemnity on regular disability insurance; but is the actual overhead amount incurred or percent thereof up to specified limit in the insurance contract. |
| Overriding – In reinsurance, commission paid to the ceding company which is more than the acquisition cost to allow for additional expenses. |
| P & I Clubs – Protection and Indemnity Associations. These are associations of ship-owners organized to provide mutual aid for members for liabilities not covered by marine hull policies. |
| Package Policy – A combination of two or more individual policies or coverages in a single policy e.g. Householders Package Policy, Shopkeepers Policy, Office Package Policy etc. |
| Paid-up Value – Paid-up Value is the reduced amount of sum assured paid by the Insurer, in case the Insured discontinues payment of premiums. This is applicable only when the Insured has paid the premiums in full for the first three years. |
| Per Accident Limit – Maximum liability of the insurance company for all claims arising from one accident. |
| Per Bottom Limit – Maximum limit to which single shipment is covered under the open cover by the insurance company; limit per bottom clause appears in all open coverages for exports and imports. |
| Peril – In insurance, any event that causes a loss and which may be included or excluded on an insurance policy, for example, an insured peril in a fire policy is fire; an excluded peril is war. |
| Peril of Nature – In insurance, a class of peril that includes earthquake, flood, hailstones, storm, thunderbolt and subsidence; such perils are usually covered by property insurance. |
| Peril of The Sea – All perils which are unique of transportation and which could not be prevented by reasonable efforts, including sinking of the vessel, standing, heavy weather, lightning, collision with other vessels or submerged objects and damage by sea water when caused by an insured peril. |
| Personal Injury – In law, a term used to embrace a broad range of torts that includes bodily injury, libel, slander, discrimination and similar offences. Also a standard insurance coverage that protects against a more limited group of torts (false arrest, detention or imprisonment, malicious prosecution, wrongful entry or eviction, and libel, slander, or defamation). |
| Personal Lines – Those types of insurance such as auto or home insurance, for individuals or families rather than for business or organizations. |
| Physical Damage – Damage to or loss of the auto resulting from collision, fire, theft or other perils. |
| Physical Hazard – A condition of the subject of insurance which creates or increases the chance of loss, such as structural defects, occupancy, or similar conditions. |
| Policy – The legal document issued by an insurance company to a policyholder, which outlines the conditions and terms of the insurance, also called the policy contract or the contract. |
| Policy Document – A booklet that details the full product information and terms and conditions of an insurance policy, and the policy schedule(s) which provides the specific benefits/premiums/payment conditions covered. It provides evidence that a contract exists between the insured and insurer. |
| Policy Face Amount – This refers to the amount stated in the policy payable in the event of death or maturity. |
| Policy Term – The period of coverage provided by an insurance policy. |
| Policyholder – A person who pays a premium to an insurance company in exchange for the insurance protection provided by a policy of insurance. |
| Political Risk Insurance – Coverage for businesses operating abroad against loss due to political upheaval such as war, revolution, or confiscation of property. |
| Pollution Liability – Exposure to lawsuits for injury or cleanup costs that result from pollution damage. |
| Pool – An organization of insurers or reinsurers through which particular types of risk are underwritten and premiums. Losses and expenses are shared in agreed upon amounts. |
| Portability – The right to transfer pension right and credits when a worker changes jobs. |
| Premium – This is the contribution / payment that a policyholder makes to an insurance company to obtain insurance cover. He or she has a responsibility to ensure that the correct amount states is paid as and when it falls due as stated in the policy document. |
| Probate – The court supervised process of validating or establishing a distribution for assets of a deceased including the payment of outstanding obligations. |
| Product Liability – Legal liability incurred by a manufacturer, merchant or distribution because of injury or damage resulting from the use of its product. |
| Product Liability Insurance – Coverage designed to provide protection against financial loss arising out of the legal liability incurred by a manufacturer, merchant, or distributor because of injury or damage resulting from the use of covered product. |
| Proof of Loss – Documentary evidence required by an insurer to prove a valid claim exists. It usually consists of a claim for completed by the insured and for health insurance claims by the insured’s attending physician. For medical expense insurance itemized bills must also be included. |
| Proposal – Form filled in by a person wanting to take out insurance. Inaccuracies or omissions (accidental or deliberate) in a proposal may invalidate any insurance policy issued. |
| Proposer – Individual or company offering or seeking insurance. |
| Provisions – The terms or conditions of an insurance policy. |
| Proximate Cause – In insurance, the immediate effective cause of an insured loss. |
| Prudent Insurer – Hypothetical insurer who is in possession of all relevant information (material facts) before issuing an insurance policy. |
| Public Liability/Third Party Liability – The insured’s liability at law (excluding liability to an employee arising out of employer/employee relationship) to pay compensation for death, injury or illness sustained by any person or damage to property caused by explosion or collapse of boiler and pressure plant or use of lilting and handling plant. |
| Pure Risk – In insurance, a risk that can result in either a break-even situation, or a loss. |
| Quarantine Restrictions – According to carriage of goods by sea act, carrier does not have the responsibility for loss of cargo arising from vessel carrying cargo that is subjected to certain imposed restrictions by health authorities in the countries involved; however, cargo insurance provider considers it as a delay beyond the control of insured and pays the claims for damage or loss to cargo when it is due to an insured peril. |
| Quarrels and Arbitration – Arbitration clause provides the mechanism that must be followed for settlement of any disputes, quarrels etc. That may arise in reinsurance contracts. |
| Quid Pro Quo – Insurance company selling policy to some person for consideration of premium paid by the insured. |
| Quota Share Cum Surplus Treaty – Proportional treaty arrangement mechanism combining quota share and surplus treaties; as an example risk can be ceded on quota share basis of 50-50 between reinsured retained and quota share insurer; reinsurer can be protected further by surplus treaty after fixing retention line of reinsured. |
| Quota Share Pools – Market pools arranged on the quota share principle where the participating companies provide quota share cessions and thereafter share the complete business as per their participation percent. |
| Quota Share Treaties – Reinsurance arrangements in which each insurer accepts a certain percentage of premiums and losses in each line of insurance. It is an automatic reinsurance, whereby the ceding company is bound to cede a fixed percentage of every risk written by it irrespective of the size or quality of the risk. |
| Quota Share Treaty – An agreement where the ceding company is bound to cede and the reinsurance company must accept a fixed percent of each risk accepted by ceding company. |
| Quotation – A statement of the amount of money that an insurance company calculates as the cost of providing insurance for something. |
| Ratable Proportion of Loss – Treating claim for loss that is insured under more than single policy; in such instances settlement is made by every insurance provider for only its portion of the loss that is determined on the basis of the sum assured bearing to the proportionate amount to the total of all involved policies. |
| Rate – The cost of a unit of insurance. Rates are based on historical loss experience for similar risks and may be regulated. |
| Rate of Premium – Pricing factor on which payable premium for particular kind of insurance cover is based. |
| Rate Per Mille – Premium rate calculated for every thousand rupees of sum assured. |
| Rated Policy – Also known as extra risk policy is a plan issued at higher than the standard rate of premium for covering extra risk where an insured works in hazardous conditions or has an impaired health issue. |
| RC Book – Registration certificate of vehicle confirming the ownership; indicative of insurable interest on the part of the insurance proposer; verified by the surveyor or insurance company in the event of an accident related to the insured vehicle. |
| Reasonable and Customary Charge – Charge for health insurance coverage that is consistent with the on-going charge or rate in specific geographic location for similar or identical services. |
| Rebate – Reduction in the amount of the premium. |
| Recurring Claim Provision – Provision within health insurance plan that specifies the period of time during which recurrence of condition is considered to be continuation of previous period of disability or hospital confinement. |
| Reduced Paid-up Insurance – Kind of insurance available as non-forfeiture option provides for the continuation of original insurance plan but for a lower amount. |
| Regulation – Supervision of business practices by government entity. |
| Rehabilitation – Restoration of fully disabled individual to meaningful occupation; provision in certain long-term disability plans providing for continuation of benefits or financial assistance while totally disabled insured is restraining or attempting for resumption of productive employment. |
| Reimbursement – The payment of the expenses actually incurred as result of an accident or sickness, but not to exceed any amounts specified in the policy. |
| Reinstatement – The resumption of coverage under a policy which has lapsed. |
| Reinsurance – Transfer of an insurance (or part of the risk covered) from one insurance company to another for a premium, not necessarily with the knowledge of the policyholder. |
| Reinsurance Facility – Alternative technique for servicing insured’s who cannot obtain insurance in the voluntary market; losses and premiums for business that has been ceded to the facility are pooled and all insurance providers share as per their proportion without considering depreciation. |
| Renewal – Continuance of coverage under a policy beyond its original term by the insurer’s acceptance of the premium for a new policy term. |
| Repatriation Benefits (under overseas mediclaim) – coverage for medical necessity for evacuating to medical facility, medically equipped flights to return home, or repatriation of mortal remains to the insured’s primary residence |
| Replacement – The substitution of health insurance coverage from one policy contract to another. |
| Replacement Clause – Clause that limits the liability of the underwriter for damage to machinery cargo. |
| Replacement Cost – Cost for repairing or replacing property at construction costs prevailing when loss occurs; cost for rebuilding or repairing the property without taken depreciation into consideration. |
| Reservation of Rights – Arrangement whereby insurer defends a case without any commitment of providing coverage in case the facts disclosed during the trial reveal the occurrence as not being covered |
| Residual Disability Benefits – Provision in insurance plan providing benefits in proportion to the decrease of earnings due to disability instead of the inability to work full time. |
| Residual Disability – Period of partial disability that immediately following a period of complete disability; benefits for residual disability are payable on pro-rata basis and are based on the percent of earning loss. |
| Retention – The net amount of risk retained by an insurance company for its account or that of specified others, and not reinsured. |
| Retroactive Date – Date on “claims made” liability insurance plan that triggers at the commencement of the coverage; retroactive date is not needed if one is shown on the policy, and claim made during the period of the plan is not covered in case loss occurs prior to this date |
| Retro-cession – The amount of risk that a reinsurance company reinsures; the amount of a cession which the reinsurer passes on. The reinsurance bought by re-insurers to protect their financial stability. |
| Retrospective Date – First date for which the claims are paid under claims-made policy of liability insurance. |
| Retrospective Rating – Rating procedure that allows adjusting the insured’s final rate depending on the insured’s own loss of the experience. |
| Risk – Possibility of loss also used for referring to insured or property covered with an insurance policy. |
| Risk Avoidance – Any action that removes the chance of an adverse outcomes happenings. |
| Risk Classification – Process through which company decides how the premium rates for life insurance must differ as per the risk characteristics of the individuals; factors include age, occupation, gender, health conditions etc.; these rules are applied for individual applicants. |
| Risk Control – Any conscious action intended to reduce the frequency, severity, or predictability of accidental losses. |
| Risk Management – procedure to identify, analyze, and either accept or mitigate uncertainty. |
| Risk Pooling Arrangement – Pooling arrangement. |
| Risk Reduction – Measure that could reduce the chance of losses occurring of the size of such losses. |
| Risk Retention Group – Alternative insurance form whereby members of similar profession or business come together for self-insuring the risks. |
| Risk Retention Insurance – Policy of bearing of risk because it would cost more to insure against it than the loss itself. |
| RIV Policy – Reinstatement value policy; standard fire and special perils plan including reinstatement clause where building, plant and machinery, or other fixed asset/s are covered for replacement or reinstatement cost allowing the indemnification of the insured in case of loss for the replacement cost or reinstatement with similar property when new as on date basis, indemnity principle is modified some to provide compensation to insured for new in place of old. |
| Robbery – The taking of property from a person by force or threat of violence. |
| Sabotage – Destruction of productive capabilities in factory or plant by those opposed to management; sabotage is malicious act and sustained losses to the insured arising due to such destruction are recoverable under the malicious extension agreement. |
| Sale of Vessel Clause – Provision within institute hull clause providing automatic cancellation of policy in case of change in ownership of vessel or management; continued coverage if agreed by the insurance provider is done through an appropriate endorsement; in case of cancellation insured will receive pro-rata return on daily premium. |
| Salvage – Rescuing people or property from a flood, fire, shipwreck or other disaster. A person who salvages goods may be paid compensation by their owners or insurers. The ownership of some salvaged goods can be contentious issue. |
| Salvage Charges – Cost incurred by 3rd parties independent of any contractual agreement towards salvage operations while saving a vessel under distress; salvage operations include towage, uprighting, refloating, or raising sunk vessel; salvage charges exclude expenses for services like those rendered by the insured or agents and would be treated as sue and labor charges or general average based on the situations. |
| Salvage Loss – Occurs when the underwriter agrees for settling cargo claim by paying the difference between the insured value and realized proceeds through sale of damaged goods. |
| Schedule of Loss – Notice completed by the assured documenting the damage or loss to personal property, contents, and/or stock. |
| Schedule – List of amounts payable for surgical procedures, dismemberment, and ancillary costs in health insurance plans; list of individual items covered under single plan like buildings, animals, and other property; for marine policies list is attached to slip, open cover, policy, or other document, often detailing premium rates for various journeys, risks, and interests. |
| Seaworthiness Warranty – Implied warranty in each policy stating the vessel must be sea worthy at the time of commencement of coverage or if undertaken in stages at every stage of the journey, ship should be reasonably fit in every way to combat ordinary perils encountered during sea voyage. |
| Security – Underwriters subscribing to risks; insurance service providers. |
| Short Period Policies – Policy that is written for a period that is shorter than the average term. |
| Short Period Rates – Amount payable for procuring an insurance coverage for a period of less than one year. |
| Short Term Coverage – Available for a maximum period of 6 months, short term coverage is used for procuring insurance between two jobs or graduates who are still not covered under group plan provided by employers. |
| Short-rate – Cancelling insurance contract at the behest of the insured with refund of premiums to policyholder lower than would be provided under pro-rata basis. |
| Sickness Insurance – Health insurance form covering losses due to illness or sickness. |
| Sight Bill – Bill of exchange payable on presentation i.e. On sight. |
| Soft Market – An environment where insurance is plentiful and sold at a lower cost, also known as a buyer market. |
| Sound Arrived Value – It refers to the market value of the goods in sound condition. |
| Spread Of Risk – The selling of insurance in multiple areas to multiple policyholders to minimize the danger that all policyholders will have losses at the same time. Companies are more likely to insure perils that offer a good spread of risk. Flood insurance is an example of a poor spread of risk because the people most likely to buy it are the people close to rivers and other bodies of water that flood. |
| Standing Charges – Expenses which still have to be met even if a business cannot earn its full income owing to fire or other damage. These expenses do not diminish proportionately as a result of the damage. |
| Stop-Loss – Type of insurance or reinsurance that covers a whole account over a period of time. No payment is made until the accumulated losses in the year exceed the stop-loss level. |
| Subrogation – Right of an insurer, having indemnified the insured, to avail himself or herself of any rights and remedies of the insured, for example, salvage. |
| Subrogation Waiver – Waiver named by the insured for giving up right of recovery against another party; generally insurance policies need subrogation rights to be preserved. |
| Sue and Labor – Expenses incurred by assured and representatives with the objective of minimizing or preventing loss that is the liability of the underwriter; excludes expenses in salvage or general acts as these are recovered under the plan as underwriter liability for contributing towards general average or salvage; sue and labor charges can be recovered under insurance plans that incorporate such clause or in accordance with the policy wordings. |
| Sum-Insured – Limit of an insurance company’s liability under a particular insurance policy. |
| Surcharge – An extra charge applied by the insurer. For automobile insurance, a surcharge is usually for accidents or moving violations. |
| Surplus – In reinsurance, it is the amount by which the sum insured exceeds the ceding office’s retention. |
| Surplus Treaty – Reinsurance agreement whereby all risks that exceed a pre-determined amount are reinsured. |
| Surveyor – Person whose job is to examine buildings, etc. And report on their condition, often employed by an insurance company (for buildings insurance) or a mortgage provider. |
| Tail Coverage – An extended reporting period extension under claims-made liability policies that provides coverage for losses that are reported after termination of the policy. |
| Tainting – State of the cargo being soiled due to atmospheric conditions; for example arising because cargo is in close proximity where odors like orange tainting teas are prevalent. |
| Tank Containers – Made from stainless steel with size of 8x8x10 and 4000 liter capacity used for carrying corrosive, toxic, inflammable, and dangerous chemical substances; these tank containers have the convenience of easier handling and complete adaptability to integrated transport systems for more effective volume loading and less costly than drums. |
| Tank Farm – Area at the refineries, storage depots, or terminals that is dedicated to storage tanks and related safety requirements for the adjoining space and spillage containment devices. |
| Tankers – Liquid bulk cargo carriers that are strongly built for carrying liquid cargoes like petrol, oil, molasses etc. Speed is between 10 and 15 knots and ply only on fixed routes, collision damage results in huge losses; risk of fire and explosion during discharging the cargo is higher with greater possibilities of pollution perils. |
| Tariff Rate – Rate determined by tariff committee for specific property/properties and against specific peril/s that will have to scrupulously adhered to by the insurance providers; in most cases this fixed rate is the minimum that is chargeable in any condition allowing insurers to charge higher if the need arises. |
| Taxying (Aircraft) – includes all movement of aircraft under its own power other than for the flight purpose; taxying is not deemed to end merely due to temporary halting of aircraft during the course of taxying from one point to another. |
| Temporary Total Disablement – Injuries or illnesses that prevent an individual from doing his/her normal duties for a limited period of time. |
| Theft – any act of stealing. |
| Theory of Probability – This theory enables the insurance company to predict potential losses based on a study of the insured’s previous loss experiences. |
| Third-Party – Person mentioned in a contract but not a party to the contract. Third-Party insurance, for example, gives the insured cover against claims made by a third party (who is not named in the policy and not a party to it). |
| Third-Party Liability – Liability arising to a party, who is not party to the contract i.e. Other than the insured or the insurer. This party/person is called the third party and the liability to him/her arising under law or contract is called third party liability. |
| Through Bill of Lading – A bill of lading providing for the carriage of goods by water, from their point of origin to their final destination, either by successive ocean carriers or by more than one mode of transportation. |
| Title Insurance – Indemnifies the real estate owner in case clear ownership of the property is challenged through discovery of faults within the title. |
| to Pay as Cargo – Used within ancillary insurances related to cargo when the insured is not needed to show any evidence for loss or interest and can claim on the plan if s/he is able to show corresponding loss has been settled on main cargo plan. |
| Tornado – Whirling wind over land mass accompanied by funnel-shaped cloud; is often violent and destructive within a narrow path often over several miles. |
| Total Disability – Injury or illness that prevents an insured individual from constantly performing daily duties related to her or his occupation or engaging in other kind of work. |
| Total Loss – Can be actual total loss or constructive total loss whereby the cost of damage repair exceeding the insured property value. |
| Transit Clause – Clause in the institute cargo classes that specify attachment and termination of the coverage. |
| Travel Accident Policy – Insurance cover for covering medical expenditures, trip cancellation, loss of luggage, flight accident, and other such losses during travel either in the insured’s own country or abroad. |
| Treaty – Agreement between reinsurance provider and ceding insurer outlining the details of the reinsurance arrangement. |
| Umbrella Liability – Insurance cover for losses exceeding the amounts covered by other liability insurance plans also provides protection to insured in several situations not covered under regular liability plans. |
| Umbrella Policy – Coverage for losses above the limit of an underlying policy or policies such as homeowners and auto insurance. While it applies to losses over the amount stated in the underlying policies, terms of coverage are sometimes broader than those of under-lying policies. |
| Under Insurance – The result of the policyholder’s failure to buy sufficient insurance. An underinsured policyholder may only receive part of the cost of replacing or repairing damaged items covered in the policy. |
| Underwriter – An insurer or official in the insurance company with the primary responsibility of performing the underwriting functions for determining whether proposed risk is insurable and if so then the rate and other terms and conditions. |
| Underwriting – The process of selecting applicants for insurance and classifying them according to their degrees of insurability so that the appropriate premium rates may be charged. The process includes rejection of unacceptable risks. |
| Underwriting Loss – Shortfall resulting post the payment of claims and expenditures against the received premium. |
| Underwriting Profit or Loss – Amount of money that an insurer gains or loses due to its normal operations; excludes investments and federal income taxes. |
| Undischarged Insolvent – The person who has declared insolvency but not paid off his creditors not has entered into any scheme of settlement with them. He is incapable of entering into any contract. |
| Unearned Premium – Portion of premium that an organization has collected but still needs to be earned as the policy has unexpired time to run. |
| Unexpired Risk Reserves – Fund that an insurance company sets up to cover a shortfall in an insurance company’s unearned premium reserve. |
| Uniform Premium – Rating structure whereby single premium is applicable to all insureds irrespective of age, gender, or occupation. |
| Uninsurable Risk – Risk that is not acceptable for insurance coverage due to its extensiveness. |
| Unvalued Policy – Insurance policy that has a sum insured against each item of property, but not acknowledge by the insurer as true values. In the event of a claim, the insured must prove the actual value of the item. |
| Utmost Good Faith – Phrase referring to contracts of insurance in which both parties must disclose all the facts that may influence the other’s decision to enter into the contract, whether they are asked to do so or not. If either party has not acted in the utmost good faith, then the contract may become void. |
| Valid Contract – A contract which can be enforced in a court of law. |
| Valuation Clause – A clause which appears in the institute time clauses and other hull clauses which provides that the insured value is to be taken as the repaired value for constructive total loss purposes and nothing in respect of break up value is to be taken into account. |
| Value – Worth of the property that is needed to be insured or which is damaged or lost. |
| Valued Policy – Insurance policy that has values assigned to insured items, the values being agreed by the insurer. In the event of claim for total loss, that is the sum paid without the need for further negotiation. |
| Variable Expenses – Cost or expenses which vary in proportion to the quantum of production or the volume of turnover. Variable expenses are eliminated while computing the gross profit of a business for the purpose of fixing the sum insured under a business interruption or the consequential loss policy. |
| Vehicles Laid Up – Refers to a comprehensively insured motor vehicle being laid up in garage and not in use. Subject to a notice from the insured in advance of the period during which the vehicle will be laid up, insurer will restrict the cover during the laid up period to fire, burglary and theft risks only. |
| Vehicles Subject to Hypothecation Agreement – It is not permissible for insurance companies to issue policies in joint names of pledge and registered owner of vehicles; coverage should be issued in registered owner’s name only and pledges’ interest is protected by using the appropriate endorsement. |
| Vehicles Subject To Lease Agreement – Insurance cover cannot be issued in the joint names of lessor and leasee; policies should be issued in leasee name and lessor interest is protected through appropriate endorsement. |
| Veterinary Health Certificate – Certificate issued by a qualified veterinarian on the health and value of the animal. This is obtained at the time of insurance so that healthy animals are only insured and for their real value. |
| Vicarious Liability – Legal responsibility for the wrong committed by another person. |
| Void Contract – Contract that was drawn up on the basis of what turns out to be misunderstandings on both sides. Such a contract is deemed in law never to have existed. |
| Void Policy – One that is inadmissible as evidence in the court of law. |
| Wagering Contracts – A contract of Marine insurance where the insured has no insurable interest in the subject matter insured nor has any expectation of acquiring such interest anytime during the insurance is in force. |
| Waiting Period – A period of time set forth in a policy which must pass before some or all coverages begin. |
| Waive – forego, refrain from insisting on application of the insurance deductible under certain specified conditions. |
| Waiver – Voluntary relinquishment of known right. It may arise when a person knowing of a right that has accrued to him, fails to take advantage of the right within a reasonable time. In case of a breach of a condition or warranty by the insured, the insurer does not take note of that and give notice to that effect he is deemed to have waived his right. |
| Waiver Clause – Clause that entitles underwriter and insured for adopting measures for prevention or reduction of losses without prejudice to rights of either party. |
| Waiver of Subrogation – A clause relevant to policies, issued in favour of two or more parties, who have financial interest and/or involvement in the subject matter of insurance, whereby the insurer consents to waive all rights of subrogation or action which he may have or acquire against any of the insured arising out of any occurrence in respect of which a claim is admitted under the policy. |
| War Hazard Exclusion – Eliminates insurance coverage for death that is a direct result of war or other hostile action. |
| War Risks Time Policy – A scheme of the Government of India for insuring Indian hulls against war and strikes risks. The scheme is applicable to all ships registered under the Merchant Shipping Act, 1958. |
| War Risks Time Policy-Government of India War Risks Scheme for Marine Hulls – Scheme by the Indian government for insuring Indian hulls against risks due to strikes or wars; applicable to all vessels registered under merchant shipping act 1958, also applicable to ships qualifying for registration that are under construction or acquired from foreign owners from the time they are at risk of Indian owners; also applicable to mechanized sailing vessels. |
| Warehouse to Warehouse Cover – Voyage through which the cargo to be moved begins from seller warehouse and terminates on arrival at buyer warehouse; scope of cargo coverage extended to take care of interior transits at both ends of the ocean transit too. |
| Warranted Underdeck – incorporated in marine insurance policies giving a promise or undertaking by the insured stating the insured cargo will be carried under deck any breach of this warranty enables insurance provider to avoid the contract. |
| Warranty – In insurance, it is an undertaking by an insured person that something will, or will not, be done, for example, that an alarm system will be maintained and switched on, Breach of warranty allows an insurer to repudiate claim. |
| Warranty Surveyors – Surveyors who carry out surveys in connection with towing of one vessel by another, to suggest the method of towage, suitability of towing line monitoring of weather conditions during the towage voyages and also the precautions to be taken in case of any untoward incidence. |
| Warsaw Convention – Signed in 1929 is an international agreement governing liability of air carrier/s in case of damage to passengers baggage and booked cargo carried from one nation to another; it now amended as Hague protocol from 1963. |
| Waterborne Agreement – Market understanding where the underwriters cover goods against risks due to war only whilst these are on board foreign vessels; rule is relaxed in case goods in trans-shipping port for a short duration awaiting onward carriage. |
| Wear and Tear – Popular and legal term for depreciation, wear and tear is the decrease in value of an items due to deterioration through normal use rather than through accident or negligence. |
| Weather Insurance – A type of business interruption insurance that compensates for financial losses caused by adverse weather conditions, such as constant rain on the day scheduled for a major outdoor concert. |
| Without Benefit of Salvage – Term in marine insurance where the underwriter forgoes subrogation rights; policy including such term is deemed to be gambling policy under law and not valid in the courts. |
| Without Prejudice – Claim paid on the occasion; although the insurer feels it does not attach the plan but such action must not be treated as precedent for similar claims during the future. |
| Work in Progress – In accounting, the value of goods currently under manufacture or services being supplied, but not completed at the end of the accounting period. |
| Workers’ Compensation Insurance – Insurance against liability imposed on employers to pay benefits and provide care to injured employees and pay benefits to dependents of deceased employees during the course of employment. |
| X – Suggest us in below section. |
| Year of account basis – Accounting technique practiced related to reinsurance transactions; within this category accounts dealing with premiums and losses during the year being considered irrespective of the origination year of the cession or loss. |
| Yield – Ratio of the income earned on an investment to the face value of the investment; also known as current yield on the investment. |
| York Antwerp Rules – Set of rules devised as voluntary code of maintaining universal standardization on treating General Average; provisions in these rules form the basis of adjustments related to general average. |
| Zones – Regions are classified into zones to segregate risk exposure and premium rates for health insurance and motor insurance. |
| Zone A – Relating to application of the premium rates prescribed within the All India Motor Tariff relates to one of the two zones of operations of motor vehicles that comprise the Madras Region and Mumbai Region but excludes Mumbai. |
Zone B – Relating to application of the premium rates prescribed within the All India Motor Tariff relates to one of the two zones of operations of motor vehicles comprising regions other than those covered under Zone A; viz Delhi, Mumbai, Kolkata. |
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***Declaration : Terms defined above are general terms commonly used in insurance industry. These terms are for the learning and information sharing purpose. In the need of any specific situation during policy servicing or claim please refer prospectus document of your insurance policy copy for better clarifications and understanding. These terms are sourced from the website of GIC, Royal Sundaram, ICICI Lombard and Future Generali.
