Abandonment
For a damaged property it may not be worthwhile to go in for repairs
because the cost of repairers may exceed the value of the property
when repaired. The insurer is entitled to take over the interest
of the assured in whatever may remain of the subject matter insured
and all proprietary rights incidental thereto. In ocean marine
insurance, the transfer by the insured to an insurer of all rights,
title, and interest in and to the insured property, in return
for the sum insured. In property insurance, abandonment is relinquishing
ownership of damaged property to an insurer to permit a total
loss claim to be made.
Absolute Liability
Liability for damages even though fault or negligence cannot be
proven.
Absolute Ownership
Absolute ownership exits where the interest or explicit right
of possession of the insured is so free from limitations, qualifications
or restrictions that it cannot be taken from him without his consent.
Accident
Any Unforeseen and unexpected event is considered an accident.
For insurance purposes it has to be due to external, physical
and violent means.
Accidental Bodily Injury
Injury to the body as the result of an accident
Accident, Hit and Run
Accidental Death or injury arising out of the use of a motor vehicle(s)
the identity whereof cannot be ascertained inspite of reasonable
efforts for the purpose.
Accidental Death Benefit
A monetary compensation in addition to the face amount of a life
insurance policy, payable if the insured dies as the result of
an accident. Sometimes referred to as "double indemnity."
Accompanied baggage
Baggage being taken by someone with his own person whilst travelling.
Accumulation
Percentage addition to policy benefits as a reward to the insured
for continuous renewal.
Acquisition Costs
The insurer's cost of putting new business in force, including
the agent's commission, the cost of clerical work, fees for medical
examinations and inspection reports, sales promotion expense,
etc.
Act of god
Any accidental act which could not have been prevented by any
amount of human care and fore thought.
Actual Total Loss
It is a loss where the goods are completely lost and become irrecoverable.
Ad valorem duty
Duty evaluated on percentage of cargo value.
Additional cover
An insurance policy extended to cover additional risk perils such
as strikes. Riots and Civil commotion etc. on payment of extra
premium.
Adjuster
A person who investigates and settles losses for an insurance
buyer.
Adjusting
The process of settling losses with or by an insurance buyer.
Administrator
An individual or professional organization, such as a bank's trust
department, appointed by the court to administer an estate when
the owner dies without having made a will or without nominating
an executor. An executor may also be appointed if the named executor
declines to serve.
Agent
An insurance company representative licensed by the state who
solicits, negotiates or effects contracts of insurance, and provides
service to the policyholder for the insurer.
Aggravation of risk
To make the existing risk worse, more troublesome, etc.
Aggregate Indemnity
The maximum amount that may be collected for any disability or
period of disability under the policy.
Agreed value policy
Policy which undertakes to pay a specified amount in case of total
loss. Under this case the policy does not take into account the
current market value.
All-risks Policy
Coverage by an insurance contract that promises to cover all losses
except those losses specifically excluded in the policy. Also
known as open peril coverage.
Arbitration
A form of quasi-judicial dispute resolution where an unbiased
person or panel gives an opinion about quantum of loss.
Arson
The willful and malicious burning of property, often with criminal
intent.
Assessor
Person who estimates the value of goods for the purpose of apportioning
the sum payable by the underwriters to settle the claims. Also
called as Surveyor.
Assignment
The legal transfer of one person's interest in an insurance policy
to another person.
Assured
Party indemnified or promised to be indemnified against loss by
means of insurance.
Average adjuster
Independent expert who assesses the liabilities of the various
parties to a common maritime adventure and to classify the various
items of expenditure between general and particular average, viz,
ship, Freight and cargo.
Avoidance
A right which can be exercised by and underwriter to relieve him
of liability under the policy because the assured has been guilty
of a breach of good faith or where the risk in voyage policy has
failed to attach within a reasonable time after the underwriter
wrote the risk.
Bailee
One who has custody of the property of another. Bailees "for
hire" have certain responsibilities to care for the property
of others that is in their custody.
Basic Limit
Usually refers to Liability of insurer indicating the lowest amount
for which a policy can be written. This amount is either prescribed
by law or company policy.
Basic Rate
The standard charge for a given type of risk for basic limit.
Beneficiary
An individual designated in a will to receive an inheritance,
or the individual designated to receive the proceeds of an insurance
policy, retirement account, trust, or other asset.
Bill of Exchange
It is the bill drawn by exporter against the importer.
Bill of Lading
Receipt for goods shipped on board a ship signed by the person
who contracts to carry them, and stating the terms on which the
goods are carried.
Blanket Contract
A contract of health insurance affording benefits, such as accidental
death and dismemberment, for all of a class of persons not individually
identified. It is used for such groups as athletic teams, campers,
travel policy for employees, etc.
Bodily Injury
Physical injury, including sickness, disease, mental injury, shock
or death.
Bonus
The Bonus system awards discounts for claim-free driving for a
certain continuous period. This goes on increasing upto a certain
limit for continuous claim free years.
Borderline Risk
An insurance prospect of doubtful quality from an underwriting
point of view to put it in one among two group of risks.
Breach of condition
When a condition of the insurance contract is broken by the assured,
the insurer may avoid the contract from the inception.
Broker
Middleman who represents an insured in the solicitation, negotiation
or procurement of contracts of insurance, and who may render services
incidental to those functions. He also represents insurer for
certain purposes such as delivery of the policy or collection
of the premium.
Burglary
It is a theft committed by breaking into or out of the premises.
Evidence of breaking in, is necessary.
Burning Ratio
The ratio of losses suffered to the amount of insurance in effect.
Business Interruption Insurance
Insurance for a business owner against losses resulting from stoppage
of business because of fire or other insured peril. The insurance
provides reimbursement for lost net profits and necessary standing
expenses.
Cancellation
The discontinuance of an insurance policy before its normal
expiration date, either by the insured or the Insurance
Company.
Capacity
The amount of capital with an insurance company as a whole
for underwriting general insurance coverage.
Capital sum insured
It is the sum insured of a Person for which cover is sought
under a Personal Accident Policy.
Captive Agent
An agent who, by contract, represents only one company and
its affiliates.
Cargo Insurance
Type of insurance that protects the shipper/owner of the
goods against financial loss if the goods are damaged or
lost while in transit in between place of commencement and
destination.
Catastrophe
Event which causes loss of extraordinary magnitude, such
as a hurricane or tornado.
Cede
To transfer to a reinsurer all or part of the insurance
or reinsurance risk written by a ceding company.
Ceding Commission
In calculating a reinsurance premium, an amount allowed
by the reinsurer for part or all of a ceding company's acquisition
and other overhead costs, including premium taxes. It may
also include a profit factor. See Overriding Commission.
Certificate of Insurance
A document issued to a member of a group insurance plan,
describing the insurance benefits and principal provisions
of the policy in brief.
Cession
The amount of a risk which the insurance company reinsures:
the amount passed on to the reinsurer.
Chartered Property Casualty Underwriter (CCU)
Professional designation granted to persons in the property
and liability insurance field who pass a series of rigorous
examinations and meet specified eligibility requirements.
Claim
It is a notification to an insurance company that payment
of an amount is due under the terms of a policy by the insured.
Claim Amount
It is the amount payable by the insurer under a policy on
a claim arising.
Claim Settling agents
They are appointed by insurer in a foreign country abroad
for survey/settlement of claims arising out of policy issued
in the home country for Overseas mediclaim and marine insurance
policies.
Claims Cohort
A group of claims with a common period of origin. The period
is usually a calendar year, but may be shorter. The origin
may be defined by the date of the occurrence of claim or
alternatively by the date of reporting.
Claims reserve
Claims provision, provision for outstanding claims/claims
outstanding, claims reserve, total claim liability.
Clause
Sentences and paragraphs describing coverage's, exclusions,
duties of an insured, and termination of coverage, and other
such parts of the insurance policy.
Claused Bill of Lading
Bill of Lading, which has been endorsed by the ship owner,
as the goods described thereon do not conform to what is
offered for shipment e.g., package missing, inadequately
packed.
Clean Bill of Lading
A bill of Lading is said to be clean if it has no superimposed
clause expressing of any defective condition of the packaging
or of goods.
Co-insurance
A means of spreading the risk on larger insurances between
two or more direct insurers.
Co-Insurers
Two or more insurers jointly covering the same risk.
Collusion
A deal between persons usually to the detriment of other
persons or for some improper purpose.
Combined ratio
A rough indication of the profitability of a property and
liability insurer's underwriting operations, generally computed
by adding the ratio of losses incurred to premiums earned
and expenses incurred to premiums written.
Commercial Lines
Insurance for businesses, professionals, and commercial
establishments.
Commission
The fee paid by the insurance companies to agents and brokers
for the sale of policies.
Common carrier
A firm that offers to transport merchandise for hire and
must accept shipments from anyone who wishes to use its
services. Different laws and rules govern common carriers
than do. Private or contract carriers that only transport
the goods of those with whom they have made agreements.
Common law
Common law comprises the body of principles and rules of
action, relating to the government and security of persons
and property, which derive their authority solely from usages
and customs of immemorial antiquity, or from the judgments
and decrees of the courts. It is outside the laws created
by enactment of statutes.
Comprehensive
A loosely used term signifying broad or extensive coverage
of insurance.
Compulsory Insurance
Any form of insurance which is required by law. e.g. Motor
third party insurance, Public Liability Act Insurance.
Concealment
Deliberate suppression of material facts that would affect
the validity of a policy of insurance.
Conditions
Those provisions in insurance contracts that qualify the
insurer's promise of indemnity or impose obligations on
the insured.
Consequential Loss
A loss which is an indirect result of an accident or fire,
e.g. food spoiled through breakdown of a refrigerator.
Consideration
Price, token, or other matter used as an inducement for
the completion of a contract, as an insurance premium.
Constructive Total Loss
A loss of sufficient amount to make the cost of salvaging
or repairing the property equal to or greater than the value
of the property when repaired.
Contract of Insurance
An agreement between the insurer and one or more parties,
called the insured, whereby the insurer undertakes in return
for the payment of a certain consideration, called the premium,
to pay to the insured a certain sum of money or to grant
certain compensation on the happening of a specified event.
Contractual liability
Legal liability assumed under contract.
Contribution
A participation, as two insurance policies in the same loss.
Contributory negligence
The lack of ordinary care on the part of an insured person,
which combined with the defendant's negligence and contributed
the injury as a proximate cause. In some jurisdictions,
contributory negligence on the part of an injured party
will defeat his or her claim.
Cover Note
A cover note is a document issued in advance pending the
issue of the policy, and is normally required if the policy
cannot for some reason or other be issued straight away.
Cover notes can also be issued during the course of negotiations
to provide cover on a provisional basis. A cover note is
not a stamped document but is honored, all the same , by
all parties concerned.
Coverage
The scope of protection provided under a contract of insurance;
any of several risks covered by a policy.
Credit insurance
A form of guarantee to manufacturers and wholesalers against
loss resulting from default on the part of debtors.
Crop-Hail insurance
Protection against damage to growing crops as a result of
named perils.
Cumulative Bonus
The percentage at which the sum insured gets increased annually,
without additional premium, e.g. Personal Accident Insurance,
Mediclaim Insurance.
Days of Grace or Grace Period
Period of time after the due date of a premium during which
the policy remains in force (when both coverage of risk
is available and also the premium can be paid without any
late fees).
Debris Removal Clause
An extension to the standard policy to cover the cost of
making a seriously fire-damaged building safe and removing
debris.
Declaration Basis
An arrangement whereby a provisional premium is paid and
subsequently adjusted by an additional or return premium
on receipt of a declaration from the insured giving details
of values at risk.
Declination
The insurer's refusal to insure an individual after careful
evaluation of the application for insurance and any other
pertinent factors.
Deductible
A provision whereby an insured may be required to pay part
of a loss, the insurance being excess over the amount of
the deductible.
Dental insurance
A type of health insurance that covers dental care expenses.
Depreciation
A decrease in the value of property over a period of time
due to wear and tear or obsolescence. Depreciation is used
to determine the actual cash value of property at time of
loss.
Disability
Inability to perform all or part of one's occupational duties
because of an accident or illness: see Total Disability
and Partial Disability.
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.
Earned Premium
Premium for which protection has been provided. When a premium
is paid in advance for a policy period, the company 'earns''
a portion of that premium only as time elapses during that
period.
Effective date
The date upon which the policy is put in force, the inception
date
Employers liability
Legal liability imposed on an employer making him or her
responsible to pay damages to an employee injured by the
employer's negligence. Generally, replaced by 'workers compensation',
which pays the employee whether the employer has been negligent
or not.
Endorsement
A written amendment affecting the declarations, insuring
agreements, exclusions, or conditions of an insurance policy:
a rider.
Escalation
Provision for automatic increases on some defined basis
in premiums and sums insured.
Estimated Maximum Loss (EML)
An expression used in fire, explosion and material damage
policies only. An estimate of the monetary loss which could
be sustained by insurers on a single risk as a result of
a single fire or explosion considered by the underwriter
to be within the realms of possibility.
Ex Gratia
A payment made where there is no legal liability
Excess (also refer Deductibles)
Agreed amount upto which no claim is paid under a policy.
Excess of loss reinsurance
A form of reinsurance whereby the reinsuring company reimburses
the ceding company for the amount and only the amount of
loss the ceding company suffers over and above an agreed
aggregate sum in any one loss or in a number of losses arising
out of any one event.
Exclusion
That which is expressly eliminated from the coverage of
an insurance policy
Expense ratio
The proportionate relationship of an insurer's expenses
to premium expressed as a percentage.
Extended coverage insurance
Protection for the insured against loss or damage of his
property caused by windstorm, hail, smoke, explosion, riot,
riot attending a strike, civil commotion, vehicle and aircraft:
this is provided in conjunction with the fire insurance
policy.
