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Insurance Glossary

Insurance Glossary

As is where is
Commercial term that buyer shall accept delivery of goods at the same place where it lies and in the same condition as it exists at the time of inspection prior to purchase. In General Insurance this term is used mostly relating to salvage disposal transactions.

Any one accident. The term, in relation to liability insurance, refers to the maximum liability of the insurer in respect of all claims, both for bodily injury and property damages of third parties arising out of any one accident.

Any one vessel. The term, which relates to 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. The term refers to the maximum liability of the insurer under the policy for all claims preferred during the policy period.

In Marine Cargo and Marine Hull Insurance, ‘Abandonment’ is a condition precedent to a constructive total loss of the property insured. The insured must inform the insurer of his intention to abandon the property before doing so. But the insurer is under no obligation to accept the abandonment.

Agreement to an offer, thereby leading towards conclusion of a contract. One of the fundamental requirements of any contract of sale. Applicable to Contracts of Insurance also.

Access to the Records Clause
The term, also called the Inspection of Records Clause, refers to the right of the reinsure to inspect any books or records of the Reinsured Company, at the expense of the former.

The term generally refers to those parts which are directly supplied by the manufacturer along with the equipment /vehicle but which are not essential for the operation/running of the equipment/vehicle.

An unlooked for mishap or an untoward event which is not expected or designed

Accident and Sickness Insurance
Term used to denote a personal accident insurance policy, which is extended to cover sickness benefits also. However benefits relating to sickness extension will be restricted to weekly compensation for temporary total disablement and for reimbursement of medical expenses towards treatment in a hospital or a nursing home for all sickness other than those which are excluded. (See also “Accident Insurance”).

Accident Frequency
A measurement of number of accidents occurring in a given period

Accident Insurance
Coverage for death or bodily injury resulting from accidental means. Cover will extend benefits for different consequences of accident, namely, death, Total disablement of either permanent or partial nature as also partial disablement of permanent nature. Cover can also provide for reimbursement of medical expenses towards treatment of accidental injury
on payment of extra premium.

Accident Severity
A measurement of the seriousness of accidents occurring within a given period, judged either by their cost or by the nature of the damage or injury to which they give rise

Accidental Means
Purely by circumstances which are wholly unexpected, unforeseen and beyond the control of the insured/beneficiary under the policy.

Accommodation Line
Acceptance by a reinsurer, as a special consideration, of a small accommodation line on a reinsurance treaty or a facultative offer. This situation would arise where a reinsurer might have shares on many profitable treaties from a company and the said company might request the reinsurer for some supporting share on a treaty with unsatisfactory results.

Account- Profit & Loss Appropriation
The format of this account is also prescribed by the IRDA Regulations. This is prepared annually at the end of the year. This shows the appropriations made out of the net profit earned during the year. The appropriations can be dividends, transfer of general reserve or dividend equalization etc. The final balance in the Profit & Loss Appropriation Account is shown in the liabilities side of the balance sheet.

Account- Revenue
This is the prescribed form, in which the final account is to be drawn for each department of premium underwritten by the insurer. The format is prescribed by IRDA Regulations. Thus, there is a separate revenue account for Fire Department, Marine Dept. and Misc. Dept. Such revenue accounts enable the underwriter to assess the underwriting profit generated by a particular department premium.

Accounting- Cash system
Basis of accounting by a company where all accounting is done only if money is either received or paid and so no dues are recognized.

Accounting- mercantile system
Basis of accounting by a company where in addition to the money received or paid outstanding incomes as well as expenses are recognized.

Accounting Policy
As there are different methods of accounting especially for specific items in the insurance companies, the company is expected to explain the method of their accounting by its accounting policy, which will be attached to the annual accounts.

Account-Profit & Loss
This is also a part of the final accounts in which the general income and expenditure pertaining to the shareholders funds are accounted apart from transfer of net underwriting profit or loss from each revenue account. The format of this account is prescribed by the IRDA regulations. This account is prepared for the transactions of the year and is intended to show the net profit or loss of the company for the year.

Accumulated Stocks Clause
A Clause which appears in Fire, Consequential Loss Policy. The insured, as a part of their business policy, may maintain stock of finished goods. Such an accumulated stock may be utilised during the period of interruption caused by a damage to meet the demand. Consequently, during the indemnity period it would appear that there was no reduction in turnover, even though the manufacturing activities are stopped. In turn, there may not be any claim in respect of loss of gross profit

The accumulated stock clause provides that in adjusting any identifiable loss under a consequential loss policy, account shall be taken and allowance made if any shortage in turnover is avoided by reason of the turnover being maintained from the accumulated stocks.

Acquired Immuno Deficiency Syndrome (Aids)
Condition characterized by illness indicative of reduced immune responsiveness in otherwise healthy individuals. The Standard Mediclaim Insurance Policy does not extend cover for AIDS.

Acquisition Cost factor
Acquisition Cost incurred by the direct insurer towards procuring business, which is taken into account by the reinsurer while fixing the reinsurance commission for the reinsurance offered.

Acquisition Costs.
This refers to the expenses incurred by the Direct Insurer for acquiring Direct Premium. Normally commission expenses come under this category. Even brokerage paid if any and also initial Publicity expenses for product launches can be considered as Acquisition Costs.

Act in force Clause
A Clause included in Excess of Loss Treaties pertaining to Liability Insurance, where such liability is statutory, to take care of changes in law or act about quantum of compensation during the cover period, by revision of rate and/or underlying loss retention as well as the limit of the excess of loss cover.

Act Liability with Fire &/or Theft
Provision under the Motor Insurance Tariff to cover a motor vehicle against act liability of the insured together with restricted own damage to the vehicle caused by Fire, External Explosion, Self-ignition or lightning or burglary, house breaking or theft. There is a percentage reduction from the premium applicable for the own damage portion of the cover in view of the above-restricted scope of the cover, which is provided in the tariff.

Act of God Perils
Any event not caused or contributed to by man. Some sudden and irresistible acts of nature that could not reasonably have been foreseen or prevented, such as floods or exceptionally high tides, storms, lightning, earthquakes etc. constitute Act of God Perils.

Act only Policy
Insurance Coverage for all motor vehicles to indemnify the insured upto the limits prescribed in the Motor Vehicle Act, 1988 in respect of his legal liability to pay compensation for death or bodily injury to any third party or damage to the property of any third party caused in any accident or series of accidents arising out of one event in so far as is necessary to meet the requirements of section 147 of the Motor Vehicle Act, 1988.

Actual Total Loss
An actual total loss of a property is said to take place when
1. The insured is irretrievably deprived of the
subject matter insured
2. The subject matter is so damaged by an insured peril as to cease to be a thing of its kind-loss of specie

3. In so far as it relates to a vessel and/or cargo thereon, the vessel is declared as missing.

Actuarial assessment of employees
The employees of a company may be entitled to various benefits by way of terminal dues at the time of retirement or resignation from the company. Eg; Gratuity for those who have completed 5 years of service, encashment of accrued leave at the time of retirement, commutation of pensionary benefits etc. Even though these liabilities arise at the time of retirement only, the employer is expected to evaluate such future liabilities by way of actuarial valuation and provide for the same in the current years accounts. Such provisions are called Actuarial assessment of employees liabilities.

Actuarial Science
A branch of knowledge which deals with mathematics of insurance. It is used in the evaluation of various risks, premium fixation commensurate with the risks and also provisions relating to unexpired risks, unexpired liabilities etc.

An expert in statistics and a mathematician in the insurance field. Conducts extensive statistical studies. Calculates insurance risks and premiums and reserves. Involves in the preparation of various annual reports in compliance of regulatory requirements.

Ad valorem
In proportion to the value.

1. Insurance premium in respect all property insurance coverage is fixed mostly in relation to the insured value of the property.

2. Calculation of stamp duty on certain portfolio is related insured value under the policy. Ex. Marine Cargo and Personal Accident Insurances.

Additional Expenses-Strikes
If the destination port is strike-bound at the time of arrival of the ship carrying cargo meant for that port, the shipowner may exercise his liberty granted by the contract of affreightment and discharge the cargo at a nearest alternate port and absolve himself of any further responsibility to the cargo. In such circumstances, the cargo owner may have to incur additional expenses in reforwarding the cargo from that port to the intended port of discharge. The ordinary cargo policy does not cover these expenses. If the cargo owner wishes to protect his interest against such eventuality, he has to avail an “additional expenses (strikes) cover” extension for all his shipments that may be effected during a period of 12 months. This extension will not be available for shipments if cover is sought when the strike has commenced in the particular area.

Balance As Per Contra
There could be certain transactions wherein the insurance companies invest the funds and create investments on behalf of a particular fund and hence the assets cannot be treated as the assets of the insurance company. Such investments are shown on the assets side along with the wordings as per contra which means similar balance will appear in the liabilities side which represents the fund for the balances for which the investments are made. eg. investments made in respect of Environment Relief Fund.

Balance Sheet
Accounting statement showing the financial condition of a company at a particular date. Listed on the statement are the company’s assets and liabilities and capital and surplus.
Balance sheet is a snapshot of the values of assets and liabilities of the Company on a particular date. Drawing a balance sheet, as per the format prescribed under the IRDA Regulations, as on the last date of the financial year, is mandatory. However, such balance sheet can be prepared on any day. The balance sheet lists out the value of all assets to the company as against the various liabilities to the company and both the values should be equal on any particular day.

Balance Sheet Reserves
Amount expressed as a liability on the insurance company’s balance sheet for benefits owed to policyholders. These reserves must be maintained according to the provisions of the insurance act, Regulations of the Insurance Regulatory and Development Authority and also as per the actuarial formulas. These reserves serve to guarantee that all benefit payments for which the insurance company has received premiums will be made.

Balances- Agents
As the business of insurance is mostly procured through the Agents all the premium transactions are accounted agent wise to arrive at dues from/dues to agents at the end of the year. As the number of transactions will be more, they are maintained separately for premium transactions and commission transactions. All the debit balances at the end of the year are added and shown in the assets side and the credit balance on the liability side of the balance sheet.

Balances- Aging Of
The account balance of any account will comprise of accounting entries over the entire period and finally at the end of the year, the balances may arise either out of last few transactions or out of the first few transactions. Hence, it is necessary to identify as to how long these transactions are outstanding in the books of accounts. For instance, a debtors balance can arise out of the last few months balances or out of first few months balances. In the latter case, it may look that they are outstanding for almost a year. Hence, steps should be taken for recovery. Such meaningful analysis can be done only when the year end balances are classified according to the age of the transaction.

Balances- Coinsurance
There are certain risks, which are shared between the direct insurers at the instance of the insured. These are of coinsurance transactions. Here the lead Insurer collects the 100% of the premium and in turn pass on the respective share of the premium to the co-insurance Companies. In the case of claims also, the lead insurer pays 100% of the claim and collects the co-insurers share of claim later. Such transactions are routed through the co-insurance companys account codes and the balances in these accounts are reflected in the assets side or liability side of the balance sheet, depending on the nature of balance.

Balances- Confirmed
The balances in the account of the insurance company may arise out of the transactions with outside parties who have to confirm their balances so as to certify the correctness of the accounts. For instance, a Bank A/c. shown with balance as per the account has to be confirmed by the banker. Similarly, an amount shown as due from outsider has to be confirmed as due from outsider. Confirmed balances add to the correctness of the balance.

Balances- Inter Branch/ Office
If the insurance company has large number of Branches for its operations, there could be many transactions between the Head Office of the Company and its Branches and also between the Branches. The balances in these Branch Accounts are grouped under Inter Branch Account Balances and shown in the balance sheet.

Balances- Reconciled
Various account balances at the end of the year are made up of different accounting entries and each entry in each account should be reconciled with the corresponding entry in which case, every item in the account balance at the end of the year can be explained. When such a detailed analysis of the transactions is done, the balances are said to be reconciled. Otherwise they are treated as reconciled balance.

Balances-Reinsurance Company
The direct insurer will be having transactions with the reinsurance companies either on treaty basis or facultative basis, which will involve premium cessions as well as claim recoveries. This will also have reinsurance commission transactions. All the balances in the reinsurance accounts are grouped under the reinsurance company balances and shown on the assets side or liability side of the balance sheet, depending on the nature of balance.

Bill of Lading. A bill of lading is a receipt signed on behalf of the ocean carrier, indicating in what apparent order and condition the goods have been received on board. It is not necessarily the complete contract of carriage of goods but is usually the best evidence of the contract. It is also a document of title and thus a document of transfer.

Back Office
Immediate controlling office, which does not directly transact business, but monitors and controls the marketing offices. Its main functions include looking to accounting records, ensure compliance by the marketing offices of the government regulations, company directives, guidelines etc. and also hold communication with marketing offices on all matters concerning the requirements of both sides.

In insurance, extent of unattended proposals, enquiries or other references, un-issued policies/documents and indisposed claims preferred on policies.

Back-Up XL Covers
Sometimes it is possible that XL Cover expires before its natural expiry date due to one reinstatement provision exhausting the cover limits by two total losses. Back-Up XL Covers are arranged as additional reinstatement covers for the remaining period.

Bad Debts
A debt which is impossible to be collected and consequently has become worthless to the creditor.

Baggage insurance
Insurance Policy providing cover against loss of or damage to accompanied personal baggage of the insured or insured’s family member(s)due to fire, theft or any accident during the course of journey including stoppage enroute, anywhere in …… The policy normally excludes routine travels like going to and returning from office, theft from unattended vehicle, articles worn on the body of the person, war etc. It is possible that the policy is modified to suit the exact needs of the proposer subject to mutual consent and the insurer following the procedure of “file and use” laid down by the Regulatory Authority.

Bagged Cargo warranty
Marine Cargo insurance policies normally exclude loss of contents from bags through seams and also natural loss in weight of cargo. In order that this issue is successfully addressed the insurers put a warranty in the policy to the effect that Shortage in damaged bags will be reckoned by a comparison of the weight of similar number of bags of the same lot arriving sound at destination and Policy will exclude shortage from sound bags

A person who has legal possession of goods belonging to others and is supposed to take such care of goods as the owner would take. He has the insurable interest in such goods and can insure the same in his name.

Contract concerning transfer of property from bailor to a bailee.

The person who transfers his property to the temporary care, control and custody of another, while retaining the ownership with him.

Material carried in vessel to ensure stability when the vessel is without any cargo.

Bank balance as per books and as per bank
As the company is entering all its bank transactions in its bank account in the ledger, the bank will also be maintaining a ledger account to record all the transactions pertaining to the company which will be reflected in the pass book and will also show the balance as per bank at any point of time. So the bank account will show balance as per the companys accounts and also as per the books of the bank.

Bank charges
The banker levies certain charges for some operations in the bank account like realizing outstation cheques, for effecting a bank to bank transfer, for returning the dishonored cheques etc. Such levies are accounted as bank charges in the books of account of the company by passing journal entries.

Bank Guarantee
In relation to Insurance, guarantee executed by a bank in favour of an insurer, guaranteeing payment of premium by the insured in relation to certain policy/policies, within the period stipulated in the guarantee.

Bank Reconciliation
Normally the bank account as per the books of the company and as per the bank should show the same balance. But there could be cases where cheques are deposited by the company, for which the company has increased its bank account balance but the same are not yet cleared in the clearing and hence the bank will show a lesser balance. Therefore the company has to prepare a statement showing how the balance between the companys accounts and as per the bank differs and what are the reasons for the same. Such a statement reconciling the bank balance as per companys books with that of the bank, is called Bank Reconciliation Statement.

Bank Transfers
When funds are transferred from one bank account to another the same has to be recorded in the books of account. This is done by way of bank transfer journal entry.

Bankers Indemnity Policy
A specially designed insurance policy for the banks. Main Coverage is against
• Loss/destruction of money and/or securities because of fire, riot and strike terrorism, burglary, whether in the premises or outside, caused by either employees or other persons
• Money and/or securities, whilst in transit, lost, stolen, misappropriated or made away with, either due to negligence, or fraud of the employees of others
• Forgery or alteration committed by employees and outsiders, resulting in financial loss to the bank
• Loss of money or goods held in trust by reason of dishonesty or criminal act of the employees

Bar Chart
A form of graphical presentation of data to highlight the main features of a frequency distribution of different kinds of risks and their consequences

Bareboat Charter
Form of Time Charter where the charterer hires the vessel and meets all expenses incurred during the period of the charter.

Smaller size Vessels for carriage of cargo from port to port-most of them used for carrying bulk cargo-some used for carriage from shore to ship. They are either dumb or power driven. They have the risk of capsizing during inclement weather

Wrongful act willfully committed by the master or crew to the prejudice of the owner or the charterer of the vessel. Deliberate running aground, setting on fire and scuttling of the ship by the crew are instances of barratry. Loss or damage arising from barratry of the ship is covered under ITC-Hulls and ICC (A) Clauses.

Base Premium
Premium charged by the direct insurer on the policy

Basic Commission
The commission on a reinsurance proportional treaty which is always applied on the written premium of the treaty.

Basic Premium
The Gross Premium charged by the insurer to the insured under a policy.

Basic Rate
The rate of premium shown in the Rate Guide or Manual of the Insurance Company for a specific insurance cover.

Basis of Loss Settlement
A separate section inserted in all the policies spelling out the basis of settlement of different types of claims under the policy.

Basis of Valuation Clause
1.Provision describing the method of calculating the value of cargo for the purpose of declaration under marine cargo insurance open covers and open policies.

2.Provision appearing in the conditions relating to the fire declaration policies for stocks, dealing with the valuation of stocks for periodical declaration purposes.

A sale contract under which the seller has the responsibility of placing the cargo on board and also incurs the ocean freight and obtain the bill of lading. It is for the buyer to arrange for an insurance cover for the voyage and until the cargo reaches the destination.

A sale contract under which the seller is obliged to place the cargo on board the ship, pay the ocean freight and arrange insurance cover for the cargo during the voyage and until the cargo reaches the destination. He should arrange the insurance cover upon terms current in the trade, which will be for the benefit of the buyer. Seller should then arrange immediate delivery of all relevant documents including the Insurance Policy for the requirements and benefit of the buyer.

Consignments in a completely knocked down condition, which are assembled at destination to be made into whole units.

Consignments in a completely knocked down condition which are assembled at destination to be made into whole units.

Commodities like Sugar, Flour or Cement tend to get caked because of water absorption from the air. Marine Cargo Insurance Policies for such cargo, providing even widest coverage normally exclude caking risk, unless caused by a direct contact with water.

Calendar Year Experience
Business results during a calendar year analysed and experience studied on a calendar year basis.

Call Option/ Put Option
These terms are used to refer to the right of the investor or borrower to terminate the borrowing programme. For instance, in the case of a 7 year Debenture with Call and Put Option at the end of 3 years, the borrower has an option to repay the money raised by the Debentures or the lender has an option to call for the redemption at the end of 3 years, instead of waiting for 7 years. When the option is exercised by the borrower it is called Call Option and when the Option is exercised by the lender it is called as Put Option. The instruments can be designed to have either Call Option only or Put Option only or both options.

The discontinuance of an insurance policy before its normal expiry date stipulated in the policy

Cancellation Clause
The clause appears in most of the period policies. This gives the privilege to both the insurer and the insured to cancel the policy if they dont want the same to continue until the normal date of expiry. The conditions of cancellation differ among different policies. The exact provision in respect of a particular policy will be found incorporated in the policy.

Cancellation of Insurance-Motor
A policy can be cancelled only after ensuring that the vehicle is insured elsewhere and the original Certificate of Insurance of the policy that is cancelled is surrendered.
Insurer should inform the Regional Transport Authority by registered A.D. about the cancellation of the insurance.

Cancellation of Treaty
A clause in the treaty reinsurance wording which outlines the procedure for termination of the obligations under the treaty by both the cedent and the reinsurer.

Cancellation Returns Only
Refund by the Marine Hull Insurers of pro-rata monthly premium for each uncommenced month of the policy when the policy is cancelled before the normal expiry date by mutual agreement between the insured and the insurer.

Cap a Well
The term used to control a blowout by placing a very strong valve on the wellhead

(1) The amount of capital available to an insurance company for underwriting general insurance coverage or coverage for specific perils.
(2) The amount of insurance a company is able to write, due to limitations on or availability of capital.

Capacity of the parties to contract
One of the essential elements for a contract to be legally valid. Applicable to insurance contracts also. Every person should be major by age, of sound mind and not disqualified by any law to which he is subject in order that he is considered competent to contract. Insurer also must have legal capacity to contract.

Capital- Authorized
This represents the shareholders contribution towards the capital of the company

Capital- Paid up
This represents the maximum amount upto which the company can raise capital by way of issue of various types of shares. This amount is fixed while incorporating the company and can be changed by following the procedure prescribed in the companies Act.

Capital, Share
Out of the authorized capital the company may choose to issue shares only to some extent. The portion for which shares are issued and allotted is called the Issued Capital. Out of the issued capital also the company may collect the entire amount of the shares in one or two stages which are called calls. So the amount, which the shareholders have been called to pay is called the Called up capital. Out of the called up amount also some shareholders might not have paid the amount due and hence the amount, which is actually paid by the shareholders is called the Paid up capital of the company. In normal parlance the capital of a company will refer to the paid up capital only.

Capital Sum Insured
The term used in personal Accident Insurance policies to denote the sum payable under the policy for death or Loss of Two Limbs or Two eyes or for other Permanent Total disablement. Insurer normally tends to limit this sum with regard to individual persons based on the earning capacity of such persons in order that the persons do not over insure for their advantage.

Captain’s protest
When the ship encounters heavy weather or any other accident or that the cargo suffers some accidental damages Captain of the Ship signs a declaration giving details of the accident and damage. This he does mainly to avoid any claim that may be lodged at a later date against the Ship management for negligence. This declaration is called Captains Protest. This document is requisitioned by the insurer in case of a claim for heavy weather damage to the insured cargo.

Captive Insurance Company
A company formed solely to insure the risks of its own parent company and all units coming within the group, with the primary objective of
a) providing the specific insurance covers for the group
b) achieving reduction in cost and also save on the tax angle
c) securing best of terms from the international market and
d) directly obtaining investment return on its invested capital.

Glass containers protected by basket work for liquid cargo shipments, particularly acids.

Cargo Insurance
Insurance of all types of goods and merchandise in transportation by Sea, Air, Rail or Road Transport where such goods or merchandise are transported under Contract of Affreightment.

Cargo Plan
Plan depicting space in a ship occupied by cargo.

Cargo Thefts (Maritime Frauds)
One of the major causes of maritime frauds. These are caused by the owners of the ships who are paper companies, deviating the route, after taking the cargo on board and discharging them into a Port of Convenience, by using falsely registered vessels. Thefts are also caused by the collusion between the shipper and the consignee by tampering of the cargo either on board the vessel or at the terminal point at destination port and stealing the cargo and later putting a claim on consignee’s insurer.

Carriage by Air Act, 1972 – Claim on Air Carrier
As per Section 26 of the Act, in case of loss or damage to luggage complaint should be lodged with the carrier within three days of discovery of such loss/damage and in case of goods the period for reporting is within seven days. Failure on the part of the owner or the person entitled to delivery shall result in no action lying against the carrier.

Carriage by Air Act, 1972– Defence of Carrier
As per Section 20 of the Act, the carrier is not liable if he proves that he and his agents have taken all necessary measures to avoid the damage or that it was impossible for himor them to take such measures. The carrier is also not liable if he proves that the damage was occasioned by negligent pilotage or negligence in the handling of aircraft.

Carriage by Air Act, 1972– Liability of Air carrier
As per Section 18 of the Act, the Carrier is liable for damage sustained in the event of the destruction or loss of, or damage to, any registred luggage or any goods, if the occurrence which caused the damage so sustained took place during the carriage by air. The term carriage includes the period during which the luggage or goods are in charge of the carrier, whether in an aerodrome or on board an aircraft.

Carriage by Air Act, 1972– Limitation of Liability
As per Section 22 of the Act, for registered luggage and goods the liability of the carrier is limited to 250 francs per kilogramme unless the actual value of the goods were declared to the carrier by the goods owner when the goods were handed over for carriage.

Carriage by Air Act, 1972– Time Limit for Suit
As per Section 29 of the Act, the right of recovery for loss or damage shall be extinguished if an action against the carrier is not brought within two years reckoned from the date of arrival of the aircraft at destination or the date on which it ought to have arrived.

Carriage by Air Act, 1972
This act gives effect to the provisions of the Warsaw Convention, 1929 and the Hague protocol, 1955 relating to international carriage of passengers and goods by Air.
The act defines the liability of the Air Carriers for death or injury to passengers and for loss of or damage to registered luggage and cargo. It also mentions the time limits within which claim notice is to be served and suit to be filed against the Air Carrier.

Shipowner, Airlines, Railways, Road Carriers or any other person or organisation who carry goods for transport.

Carrier’s Act, 1865– Notice of Loss
As per Section 10 of the Act no suit shall be instituted against a common carrier of the loss/damage to goods, unless notice in writing has been given within six months from when the loss/damage first came to the knowledge of the goods owner or his agent

Carriers’ Legal Liability Insurance
Policy intended to cover the legal liability of the Transport Carrier for loss or damage to goods entrusted to him for transport from one place to another. As the title of the policy implies, it does not cover any contractual liability assumed by the carrier. Insurer’s, for underwriting considerations, tend to limit the coverage only in respect of loss or damage to goods arising out of a fire or any other accident to the carrying vehicle and also insist that the carrying vehicle should also be covered comprehensively under motor insurance

D.A.F. (Delivery At Front)
One of the terms of contract of where the seller undertakes to deliver the goods at a named place or point at the frontier (at the border between the two nations)

D.D.P. (Delivery Duty Paid)
One of the terms of contract of sale where the seller undertakes to deliver the goods at the named place in the country of the importer and also pay the customs duty.

D.D.U. (Delivery Duty Unpaid)
One of the terms of contract of sale where the seller undertakes to deliver the goods at the named place in the country of the importer, but that the duty for the goods shall be paid by the buyer.

D.E.F. (Delivery Ex Ship)
One of the terms of contract of sale where the seller where the seller has the responsibility to arrange shipment of the goods up to the destination port and bear costs as well as risk up to that point.

D.E.Q. (Delivery Ex Quay)
Similar to a D.E.F. contract but that the seller has responsibility to see that the goods are placed in the quay.

Robbery committed by a group of persons. Standard Burglary Insurance Policy issued to both business houses and dwellings cover loss of property arising out of a dacoity

Damage by hooks, mud, oil or Other extraneous substances.
Group of extraneous perils covered as an extension to the coverage granted under the marine cargo insurance policy subject to the Institute Clauses ICC © or ICC (B) on payment of appropriate additional premium. The losses grouped under this category are, damage by hook, oil, mud and contamination by any extraneous matters. The hooks used by the dock labour for moving goods in bales, rolls or bags cause extensive damage and loss of contents. Contamination by mud, acid and other chemicals is also frequent in respect of bagged or baled cargo.

Monetary compensation awarded at law for a civil wrong or a breach of contract

Date of issue
Date on which the policy, evidencing the coverage has been issued by the insurer

District Consumer Disputes Redressal Forum.
Complaints against insurers for deficiency of service can be filed by the policyholders in the district forums where the compensation claimed does not exceed Rs.5,00,000/-. The District forums have jurisdiction over one or more districts.

Dead Well
A well that has ceased to produce oil or gas either temporarily or permanently.

When space is booked on a vessel but is not used by the party who booked the space, freight is still payable. This is called Deadfreight. The right to such deadfreight is normally exercised by the shipowner only under charterparties

The maximum weight in tons of the cargo, stores, water, fuel and crew, all put together which a ship can carry when loaded down to her load-line level.

Authorised agent of manufacturer for sale of the manufactured goods/vehicles

Termination of life as a result of an accident. In order that claim for such death is recoverable under the policy, the beneficiary should furnish to the insurer a death certificate issued by the concerned authority. Sometimes a postmortem certificate may also be insisted to establish the cause of death.

Death Benefit
A payment made to the nominee or the legal heir of the insured under a Personal Accident Insurance Policy in the event insureds death.

Death Claim
Claim lodged under the policy by the beneficiary for the death of the insured or the insured person.

A bond that is backed only by the general credit of the issuing corporation. No specific property is pledged as security behind the loan.

Debentures -Convertible / Non-Convertible
When Debentures are issued with specific understanding that after a specified period the same will be converted into Equity Capital of the Co. either at a price determined or a price to be fixed as per the formula determined. For instance, a Debenture of Rs. 1000/- issued at 14% interest for 5 years can be converted at the end of 5 years into Equity at a price of say Rs. 15 per share (Face value Rs. 10) at the end of 5 years or at a price equivalent to the average of the six monthly trading price prior to the date of conversion. When no such compulsory conversion into Equity is specified in the Debenture the same becomes Non-Convertible Debenture.

Debentures – Optionallly Convertible
A Company can issue Debentures giving the option to the lender to convert into Equity at a specified price or a formula and in case the lender does not exercise the option the Debenture will be redeemed on the specified date. In this case the lender has an option to convert or not depending on the market price of the share on the date of the conversion or any other factor he may consider for Conversion.

Debentures – Project
Money raised through Debentures by a Company, for setting up a new project or for Capital Expenditure. Normally the period of such Debentures are long term which are covered not only for the construction period of the project but also upto the period by which the Company will be able to earn out of the new project to redeem the debentures. Normally such Project Debentures are appraised by the Financial Institutions.

Debentures – Rated Or Unrated
Debentures are instruments, which are normally rated by Credit Rating Agencies like ICRA, CRISIL. These Agencies rate the Debentures depending on the capacity of the Comapny to redeem the debentures on the due dates and also to pay interest on due dates. Normally a strong rating is indicated by a rating of AAA and it goes down to `AA or `A, even `BBB. However IRDA Norms prescribe that the minimum rating for investments should be of `AA and it can be reduced to A+ in specific circumstances by the Investment Committee of the Insurance Company.

Debentures- Secured
Debentures issued by charging any of the assets of the Co.

Debentures -Unsecured
Debentures raised without any security

Debentures -Working Capital
A Company can borrow money from the market for meeting its Working Capital requirements by issuing Debentures. Normally such Debentures are for short periods like 1 or 2 years. They could be either Secured or Unsecured.

Debit and Credit Balances
have been passed can be balanced. If the value of debit items is more than that of credit items the account will show a debit balance and if the value of all the credit entries in the account are more than that of debit entries it will show a credit balance.

Debris Removal Clause
The Clause, when attached to a standard fire and special perils policy, on payment of an additional premium provides cover for an additional amount, in excess of the limits prescribed in the standard fire policy, as agreed to between the insurer and the insured towards costs and expenses necessarily incurred by the insured for removal of debris resulting from an accident.

Debt Service
Cash required in a given period, usually one year, for payments of Interest and current maturities of Principal, on outstanding debt. Project financiers would require the owner of the project to take out insurance for debt service also in the event of delay in the commencement schedule of the project arising out of accidental damage to the project materials.

Deceptive practice
Concealment of actual fact. Eg. Insurance official or the agent giving impression to the prospect of some coverage being provided in the policy while no such coverage appears in the policy document

Decision Support System
A part of the Management Information System that provides answers to problems and that integrates the decision-maker into the system as a component.

Decision Tree
Diagram that illustrates all possible consequences of different decisions at different stages of decision making.

Deck cargo
Cargo carried on deck of a ship. Insurance on cargo is normally deemed to apply only to cargo carried under deck unless specifically incorporated in the policy to the effect that the cargo is carried on deck.

Statements in an insurance contract that provide information about the property or life to be insured and used for underwriting and rating purposes and identification of the property or life to be insured.

Declaration Clause
A clause which appears in marine cargo insurance open policy or open cover. This provides that all dispatches coming under the purview of the open cover/open policy should be declared for insurance without exception, whether arrived or not.

Refusal of an insurer to accept a risk proposed for insurance or to renew an existing insurance

The proportion of loss that the insured bears in respect of any claim. This will be in two forms, namely,
Amount of excess, which will be mentioned either as a fixed amount or a percentage of the sum insured or the claim amount.
Time excess by which the insured will not be entitled to the claim relateable to a specific period (usually number of days) stated in the policy

Deductible, period
Deductible to be applied in respect of each claim expressed in the form of number of days claim relating to which will not be payable under the policy.

Defeasible Interest
A term relevant to marine adventure. An interest that may cease to exist after commencement of voyage. e.g. an importer insuring the goods which he bought from overseas seller, although he is entitled, if the seller be guilty of delay or other default, to reject the goods, or treat them at seller’s risk

One of the parties in a negligence law suit from whom the other party seeks relief for certain wrong complained of by the latter to have been committed by the former.

Defense Costs
Costs and expenses incurred by the defendant in a law suit in connection with defending the suit filed against him by the plaintiff (the party seeking relief from the defendant)

Economic Limit in increased cost of working
The term relates to the limit up to which the insurer will pay under a fire consequential loss policy for the additional cost of working incurred by the insured to avoid totally or partially, the reduction in turnover during the indemnity period. Economic limit means the extent of gross profit saved by the incurring of the additional cost of working.

E & O.E.
Errors and omissions excepted.

Each and Every Loss
Excess of Loss Reinsurance arranged on “Any One Event” basis under which each and every loss arising out of the one event will be accumulated and XL recovery effected of such accumulated loss en excess of the underlying loss retention of the reinsured. An event of loss is defined as 168 consecutive hours and each and every loss during that period is aggregated as stated above for application EL recovery.

Each and every risk each and every loss
The term relates to Treaty Reinsurance. The agreement provides for the reinsured to determine what is one risk, (Ex. whether it is one building or one group of buildings under one roof) and what is one loss. (Ex. Limiting the period and geographical scope of a loss occurrence)

Earned Premium
The portion of the premium which is the property of an insurance company, based on the expired portion of the policy period. For example, an insurance company is considered to have earned 75 percent of an annual premium after a period of nine months of an annual policy has elapsed.

Earned Premium – Reinsurance
In relation to reinsurance, is the premium ceded and included in the year in question plus reserve for unexpired risk brought forward or portfolio premium entry less reserve for unexpired risk at the end of the current year or portfolio premium withdrawn.

Earthquake Fire and Shock
An extension of cover provided to the standard fire and special perils policy on payment of extra premium. Loss/damage to the insured property caused by fire or shock or both resulting from earthquake is payable as per this extension.

Earthquake Zone
For the purpose of differentiating the more earthquake-prone areas from the less-prone ones and providing different rating structures for the earthquake cover under the Fire Policy.

Economic Life
Balance of period for which a machine or other property will earn to its owner more than the maintenance and/or the operating expenses for the same. This is the prime factor which is taken into account while fixing the market value of the item for insurance purposes.

Economic Loss
The estimated total cost, both insured and uninsured, incurred by an individual or family or a business house, arising out of the consequences of any accident or mishaps (such as motor vehicle accidents, work accidents, personal accidents and fires); includes such factors as property damage, funeral expenses, wage loss, and medical, hospital and legal costs as also third party liabilities

Economically Vulnerable or Backward Classes
As per IRDA Regulations, means persons who live below the poverty line.

Effective Date
The actual date on which the insurance coverage granted under an insurance policy will come into force.

Efficient level of risk
The amount of risk remaining after an individual or business pursues activities such as loss control, loss financing, and internal risk reduction, to the point where marginal benefit equals marginal cost

Eight System
A system followed in reinsurance in connection with Premium Portfolio Adjustment for ascertaining unexpired risk liabilities. Policies issued during the period of twelve months are segregated into eight blocks each of one and half month. Then unexpired premium is computed by unexpired risk period of each block.

Ejusdem generis
Means “of the same kind”. Where general words follow specific words which have a quality in common, the general words are considered to refer merely to things of the same kind.
When the policy mentions a list of named perils and end the list with the words and all other perils such expression is subject to the legal principle of ejusdem generis and means only perils similar to the ones specified earlier.

Electrical Clause
A clause appearing as a part of the Geneal Exclusions in the Standard Fire and Special Perils Policy relieving the insurer of liability for loss or damage to any electrical and/or electronic equipment or installation arising from over-running, excessive pressure short circuiting, arcing, self heating or leakage of electricity, from whatever cause. But the damages to any adjacent insured item consequent upon such over-running etc. is payable under the policy.

Electronic Equipment Insurance
Policy which provides coverage against sudden and unforeseen material damages to any electronic equipment due to any cause, subject to certain exclusions. Broadly the cover is against Fire and Allied Perils, Explosion, Machinery Breakdown, short circuit and other electrical causes theft, burglary, water damage, humidity, faulty operation, gross negligence, lack of skill, falling object , entry of foreign bodies, etc. The policy is also extended to cover loss or damage to the external data media as also the cost of reconstruction of data on such external data media. Further coverage is also provided for additional expenditure incurred as a result of the result of the failure of the electronic system necessitating the use of a substitute system. The policy will be subject an excess in respect of claims on all the above heads.

A governmental prohibition, either on political considerations or economic reasons against shipping movement, cargo or trade.

Prohibition by the government for shipment of certain goods or merchandise to another country. Marine Insurance of such goods to such country will not be considered legally valid.

Fraudulent use or misappropriation of another’s property or money which has been entrusted to one’s care.

EML Underwriting
Term used in connection with Engineering Reinsurance where the ceding company’s retention and the treaty reinsurers’ share are assessed as a percentage of the Estimated Maximum Loss arising out of one loss event.

Employee (BBI Ins.)
The term ’employee’ is deemed to mean all existing employees (officers, clerks and sub-staff) whether permanent or temporary, whole time or part time, on contract or otherwise, including apprentices, on the salary roll of the bank at all its offices, but shall not include any director or partner other than salaried.

Employer Form
Refers, in relation to the Fidelity Guarantee Insurance, to a form to be completed by the insured (employer) which is in the nature of a proposal form and which will form the basis of the contract. This will seek for details about the employer as also the the nature of the duties of the employee who should be guaranteed, the system of check in the company past defalcation if any by the employee etc. At the end, the insured will make a declaration certifying to the truthfulness of the statements made by him.

Memorandum issued in connection with effecting some additions, alterations or deletions in the terms of coverage granted under the standard form of policies, either at the time of issue of the standard policy at the time of commencement of insurance or any time during its currency based on mutual agreements between insured and insurer. This will be signed by the authorised signatory of the insurer and once issued, the policy and the endorsement together will constitute the evidence of the contract.

Energy Insurance Package Policy
against all the risk exposures connected with the Oil and Energy Risks.Coverage is under five sections as per details below:

1) Property Insurance Coverage for all off shore property comprising of Platform, Pipelines, Materials on Board Rigs, Cargo, Drill Barges and Drill Ships, Multipurpose support vessels and Seismic and other vessels-Cover including War and Strike Risks.

2) Property Insurance Coverage for all onshore property, including Land Rigs and Drilling Equipment

3)Expenses of Well Control

4) Third Party Liabilities, comprising of Specified Offshore and Marine Liabilities and other liabilities

5) Terrorism Coverage in respect of all interruptions
In view of the complexities of the risk and substantial reinsurance requirement, the coverage is always finalised under the direct involvement of the reinsurers right from the beginning and the cover granted as per international practices.

Energy Treaty
Reinsurance Treaty in respect of offshore drilling rig platforms In an Oil Field in the deep seas pipelines for oil supply to onshore storage units, refineries etc. which are defined as Marine Hull Offshore Business

Entrepot trade
The term refers to import of goods for purposes of immediate re-export to anothr country. Goods imported under this arrangement are not subject to import duty.

As defined in the National Environment Tribunal Act,1995, includes water, air, and land and the interrelationship which exist among and between water, air and land, and human beings, other living creatures, plants, micro-organism and property.

Environment (Protection) Act 1986
A comprehensive umbrella legislation for enforcement of measures for protection of the environment and for co-ordination of the activities of the Central and State Pollution Control Boards constituted under the Water and Air Acts.

Environment Relief Fund
Fund established as per the provisions of the Public Liability Insurance Act, 1961. The relief fund shall be utilised for paying relief under the award made by the Collector under the Public Liability Insurance Act and shall meet the excess over the amount paid under the insurance policy

Environmental Damage
The injurious presence in or on land, the atmosphere, or any water course or body of water of solid, liquid, gaseous, or thermal contaminants, irritants, or pollutants.

Environmental Impairment Liability Insurance
Coverage designed to cover losses and liabilities arising from damage to property by pollution.

Environmental Pollutant
Any solid, liquid or gaseous substance present in such concentration as may be or tend to be, injurious to environment

Environmental Pollution
The presence in the environment of any environmental pollutant.

Environmental Risks
Risks attributed to the release of contaminants into the air and the disposal of industrial wastes on land and into water courses.

Equipment Leasing
Equipment purchased and leased out to another. Owner benefits by the lease rental as also by tax benefits. Insurance Policies for the leased property will be issued in the name of the owner only but the lessee’s interest can be noted in the policy if required by the parties.

Equitable interest
An interest recognisable at law.

Erection All Risks Insurance
Policy intended to cover the projects whilst in course of construction. The policy provides coverage to all project machinery and materials against all risks, subject to certain named exclusions. The cover is extended to include all civil engineering works connected with the project, insured’s surrounding property and third party liability. The period of the policy will commence from the arrival of the first consignment of the project materials at the site of erection and continue until the erection and testing is completed and the project commissioned. The sum insured will represent the estimated completed value of the project. Suitable amounts of coverage will have to be chosen by the insured for surrounding property and third partly liability coverage. This policy is wholly governed by Tariff.

Error, Omission & Alteration Clause
A Clause in proportional treaty wordings which provides that any accidental or inadvertent error or omission shall not prejudice the treaty and the same will be corrected as soon as possible and necessary adjustments will be made.

F.A.S. (Free Alongside Ship)
One of the terms of contract of sale where the seller has the responsibility to place the goods on the quay alongside the ship upto, which point, they remain at his risk. The transport cost up to that point is borne by him. Once goods are so placed the risk gets transferred to the buyer including all further costs.

F.C.&S Clause
A standard clause in a marine insurance policy by which the insurer excludes coverage of loss due to “capture” and “seizure” as well as “arrest, restraint or detriment, and the consequence thereof or of any attempt thereat (piracy excepted), and also from all consequences of hostilities or warlike operations, whether before or after declaration of war.”

F.C.A. ((Free Carrier)
One of the terms of contract of sale where the seller has the responsibility to deliver the goods to a carrier to be named by the buyer at a place also to be notified by the buyer. The goods are at risk of seller till such delivery and the risk thereafter is transferred to buyer including further costs.

First Information Report lodged with the Police Authorities in case of a Fire or Explosion or Burglary in the insured premises or Road accidents involving third parties. This is one of the documents of claim, especially when claims for third party liabilities are lodged under the policy.

One of the contracts of sale relating to imports or exports, where the seller is responsible to place the cargo on board the ship and obtain the bill of lading from the steamer company. Thus he becomes responsible for any loss to cargo prior to its being placed on board the ship. It is for the buyer to arrange for marine insurance for cargo for the voyage and until it reaches the destination. In normal practice the buyer in F.O.B. contracts insures the cargo from warehouse to warehouse.

F.O.B. Insurance
An Insurance cover taken by the seller of the cargo to protect his interest from the time it leaves his premises and until it is placed on board the ship and a clean bill of lading is obtained.

Factual Expectation
A fair and strong expectation of an occurrence happening resulting in someone getting an insurable interest in a property in due course. In marine insurance a person can insure a cargo in which he does not have an insurable interest at the time of proposing for the cover but he will have a factual expectation of acquiring such an interest at a later date.

Facultative Obligatory Open Cover
This is similar to Facultative Obligatory Treaty but with only one difference. This has no line limitation whereas the Facultative Obligatory treaty has.

Facultative Obligatory Treaty
An agreement whereby the ceding company has option to cede (not bound to), as in the case of pure facultative placements but the reinsured is bound to accept (no option to decline), as under a treaty arrangement, a share of a specified risk underwritten by the ceding company. This treaty has thus both the characteristics of facultative cessions and of obligatory treaties. It normally comes after surplus treaties and gives automatic reinsurance facilities to the ceding company when the capacity of the surplus has been exhausted.

Facultative Reinsurance
Oldest method of reinsurance. Each risk is considered separately and reinsured. It is necessary for the insurance company to supply the reinsurer all the material information about the risk to enable the latter to decide about acceptance of reinsurance and the extent thereof as also the rate.

Failed Well Insurance
Coverage providing compensation to the insured if a dug well fails to yield specified quantity of water. Compensation is also payable for collapse of aside walls whilst digging is in progress.
Insurance provided for both open wells and bore wells but for new wells only.

Failure of brakes
Breaks of the insured vehicle failing to perform their function leading to a road accident. Only consequential damages are covered under the policy.

Failure of Consideration
Occurs when the risk for which the insurer has accepted the premium fails to attach. The full premium paid is returnable in such circumstances, except where there is a fraud

Fair Market Value
Price at which an asset or a service passes from a willing seller to a willing buyer, where both seller and the buyer are assumed to be rational and have a reasonable knowledge of the relevant facts.

Fair Value Exchange Account
A new account created as per the IRDA Regulations. As per the regulations, Listed Equities, Securities and Derivative Instruments shall be the assessed for the fair value on the date of the Balance Sheet. The fair value is the lowest of the quotations to those securities or instruments in any of the stock exchanges. An Insurer has to compare such fair value with the book costs and any impairment in the value has to be transferred to the Fair Value Exchange Account. All unrealised gains and losses due to changes in the fair value of the Instruments have to be taken to the Fair Value Exchange account and as and when these gains or losses are realised, the same will be transferred to Profit and Loss A/c.

Fall or Displacement of building clause
A provision appearing in the Standard Fire and Special Perils Policy to the effect that all insurances under the policy shall cease on expiry of seven days of fall or displacement of any insured building or part thereof or of the whole or any part of any range of insured buildings or of any structure of which such building forms part. Also known as “Fallen Building Clause”

Family Coverage
Property and/or personal lines of insurance where in addition to the individual, his or her dependants are also covered as insured persons.

Farmers Package Cover
A comprehensive package insurance for the benefit of the farmers to cover the individual, his/her family members, property in the house, animals, animal driven carts, agricultural tractors etc. against all accidental loss or damage and accidental death and injury.

Fatal Accidents Act, 1855
Act which provides that, if the death of a person is caused by wrongful act, neglect, or default, an action for damages is maintainable by the legal heirs of the deceased against the party causing injury. This act abolished the long standing rule of common law according to which a civil action for damages died with the person to whom or by whom the tort was committed.

Measurement for assessing sea depth on the basis that one fathom equals 1.8288 metres.

Field Staff
Company staff whose work is mainly outdoors and comprises of soliciting and procuring insurance business either directly or through the medium of insurance agents. They are remunerated by monthly salary and allowances like any other company employees but in addition are paid growth and profit incentives in relation to the business procured by them. They also enjoy certain perks. This cadre exists as of now, only in the four nationalised insurance companies and is governed by a special scheme known as ‘Development Officers’ Scheme’.

File and Use Procedure
Formal submission of an insurance product with full details of coverage and rates, terms and conditions applicable to the Regulator before marketing the product. If no reply comes from the Regulator within the specified period the product is deemed approved.

Financial Reinsurance
A substitute to the conventional reinsurance where funding is used as a technique to spread loss or profit over a period of years after discount for handling costs, fees, commission etc. It is mostly used as a complementary arrangement for traditional reinsurance where full capacity is not available.

Financial Risks
Risks solely associated with finance extended or received, in different forms, by an individual or an enterprise, resulting in the beneficiary of finance not carrying out or not being able to carry out his/its financial obligations under the contract. Certain financial risks are insured by general insurers.

Financial Underwriting
A method of evaluating the results of a reinsurance treaty. Under this method factors like interest earned on the premium income and loss or gain in foreign exchange are also taken into account.

Finished Goods
Products or goods which have been fully manufactured, assembled or built and are ready for sale.

A combustion accompanied by a flame or glow, which escapes its normal confines to cause damage.

Fire & Theft Risks
In relation to motor insurance, refers to the restricted cover extended to a vehicle which is in garage and out of use.

Fire and Allied Perils
A term which by convention is used to denote the following perils in addition to Fire
– Lightning
– Explosion/implosion
– Aircraft Damage
– Riot, Strike, Malicious and Terrorism Damage
– Storm, Cyclone, Typhoon, Tempest, Hurricane, Tornado, Flood and Inundation
– Impact Damage
– Subsidence and Landslide including Rock slide
– Bursting and/or overflowing of Water Tanks, Apparatus and Pipes
– Missile Testing operations
– Leakage from Automatic Sprinkler Installations
– Bush Fire
– Earth Quake

Fire Brigade
Group of people specialised/trained in extinguishment of fires.

Fault tree Analysis
A diagram of cause and effect relationships, showing the outcome, if a particular course of action is taken or continued. This method of analysis is increasingly used in engineering accident cause and prevention.

Faulty Design
Term relating to Builder’s Risks Insurance. The relevant clause when attached to the Builder’s Risks Insurance Policy provides cover for loss or damage to the insured property arising from faulty design of any part or parts thereof but does not extend to cover any repairing, modifying, replacing or renewing such part or parts, nor any cost or expense incurred by reason of betterment or alteration in design.

Favoured Reinsurance Terms
Reinsurers sometimes insist that reinsurance treaty terms should be same for all reinsurers of a treaty in non-reciporcal trading. There should be no discrimination by concessions to a few. Reinsures accept a share subject to ‘favoured reinsurer’s terms’

FEA Discount
Discount granted as per tariff for installation of Fire Extinguishing Appliances in the insured premises. Dis count ranges from 2.5% to 10% on the premium depending upon the installations

Feasibility Study
Study carried out to decide workability of a project from various factors relating to physical, economical, environmental, political etc. aspects. Such a study is normally undertaken with the help of experts in various fields.

FGU Losses
“From Ground Up” Losses – A term used in connection with Excess of Loss Reinsurance, which refers to the incurred losses of protected portfolio of an XL cover which are also the ultimate net loss for the XL cover.

Fidelity Exclusion
1. A provision in burglary and money insurance policies excluding loss caused by the infidelity of the employees of the insured.

2. A provision in liability and professional indemnity policies excluding coverage for dishonest act of the insured.

Fidelity Guarantee Policy
An Insurance Policy which reimburses an employer for losses caused by dishonest or fraudulent acts of employees.

A person who holds something in trust for another.

Fiduciary Relationship
Relationship arising when a person holds something in trust for another.

Fire Engine
A motor truck equipped with water tank, pipes etc. to spray water, chemicals etc. on fires to put them off. If fire engines are maintained by the insured, a discount is given on the fire premium rate in recognition of the said feature as a risk improvement feature.

Fire Extinguisher
Instrument that uses non combustible substances like carbon dioxide to extinguish a fire, by depriving it of oxygen.

Fire Hazards
The physical or chemical properties of a matter of whatever state which makes it susceptible to the risk of fire in varying degrees.

Gainful Employment
A term used in connection with the Permanent Total Disablement condition under a personal accident insurance policy. The disablement is of permanent and irrecoverable nature and is absolutely total, in the sense that the insured person is prevented from engaging in any employment, which would gain him financial benefits. (Ex. Paralysis)

Garbling Clause
The clause, in relation to marine/transit insurance of commodities like tobacco, coffee beans or grain, provides that the insurer will pay the cost of garbling (sifting and cleansing to separate sound from the whole), as such an exercise prevents further damage and reduces the claim.

General Average
A loss, which arises in consequence of extraordinary sacrifices made, or expenses incurred for the preservation of the ship and cargo in time of common peril comes within General Average and must be borne proportionally by all those interested in the adventure. The principle of General Average forms part of Maritime law and is applicable whether or not the parties to a maritime adventure are insured.

General Average contribution
The monetary contribution required of ship owners and cargo owners in respect of general average expenditures and general average sacrifices.
The underwriter is liable for the general average contribution paid or payable by the assured when the general average act is performed to prevent loss from an insured peril. Such liability however is limited to the proportionate amount of the contribution payable by the insured, if the contributory value of the interest is more than the insured value.

General Average Counter Guarantee
When the ship owner declares General Average, he insists on production of an unlimited guarantee to be provided by underwriters. The underwriters issue unlimited guarantee against the assureds counter guarantee whereby he commits to reimburse the underwriters the overpayment resulting from underinsurance. When the Adjustment is completed, the insurers first pay the contribution payable by the insured interest. If the contributory value of the insured interest happens to be more than the sum insured, the counter guarantee is invoked by the insurers and the insured is asked to pay back the excess amount paid on his behalf.

General average Deposit
In the absence of any acceptable form of guarantee, the receiver of the cargo will be required to pay a deposit into the general average fund before taking delivery of the cargo. The amount to be paid as a general average deposit is usually slightly higher than the estimated contribution. A deposit receipt is issued against the money thus deposited and the deposit earns interest. When the adjustment is completed, the holder of the deposit receipt is paid the difference between the deposit plus accrued interest, and the contribution.

General Average Essentials
(1) The whole adventure must be in peril

(2) The peril must be imminent

(3) The act must be voluntary

(4) The act must be reasonable and prudent
(5) The act must be for saving all the interests involved

(6) The sacrifice or the expenditure must be extraordinary in anture

General Average Expenditure
An extraordinary expenditure incurred by the shipowner intentionally and reasonably to preserve from peril the property involved in a common maritime adventure (e.g. port of refuge expenses, salvage remuneration, etc.) is known as General Average Expenditure. Such an expenditure is recoverable from the general average fund but not directly from the underwriters. The underwriters liability for such expenditure would be only that part of the expenditure that related to the general average contribution payable by the insured interest.

General Average Fund
A Fund created by the shipowner and the average adjuster appointed on the declaration of general average, from out of the deposits collected in connection with the general average adjustment. Shipowner has authority, without waiting for the final adjustment, to draw from the fund for general average expenditure.

General Average Guarantee
Where the cargo underwriters are prepared to commit themselves to paying the contribution assessed against the insured cargo owner, they will give a written guarantee to pay the contribution attaching to the insured interest. Such guarantee is acceptable to the shipowner only if it guarantees payment of the full contribution assessed against the insured cargo. The underwriters issue such an unlimited guarantee after obtaining from the insured a counter guarantee to reimburse the underwriters for any overpayment due to under-insurance.

General Average Loss
A general average loss is a loss caused by or directly consequential to a general average act. It includes general average expenditure as well as a general average sacrifice.

General Average Refund
This relates to the difference between the General Average Deposit collected and the actual general average contribution in respect of any interest saved by general average measures. Such refund is payable only to the party who holds the deposit receipt.

General Average Sacrifice
Sacrifice of one or more interests involved in the adventure for saving rest of major interests

General Damages
Damages awarded to an injured person for intangible loss which does not readily lend itself to quantitative measurement. Frequently called pain and suffering. General damages are distinguished from special damages which are awarded for actual economic loss, such as medical costs,legal charges, cost of repairing/replacing damaged property, loss of income, etc.

General Insurance Business
means fire, marine or miscellaneous insurance business, whether carried on singly or in combination with one or more of them

General Liability Insurance
Coverage that pertains, for the most part, to claims arising out of the insured’s liability for injuries or damage caused by ownership of property, manufacturing operations, contracting operations, sale or distribution of products, and the operation of machinery, as well as professional services

General Operating Expense
Administrative expenses incurred by an insurance company which does not include agents’ commission and taxes paid by the company.

Geographical Limitation
Territorial jurisdiction of the insurance coverage.

Ghost Animals
Animals which do not exist. It is possible that insurance is taken for animals that do not exist and subsequently putting in a claim by falsifying the records and claim documents.

A process related to the cotton commodity. Cotton staples will be combed in order to remove the cotton seed. This process will be carried out in the ginning section of the factory. The process increases the fire hazard.

Gold Clause Agreement
This is an agreement entered into by insurers, shipowners and merchants associations who are members of the British Maritime Law Association in the year 1950 to increase the per package limit of liability of the carriers from Pound Sterling 100 to 200 and to extend the time limit for bringing action against the carriers from 1 year to 2years. The agreement bound the signatories to bring action in the UK even though the bill of lading may provide for jurisdication elsewhere. This Agreement, however, does not exist now.

Golfers Equipment Insurance
A special cover for Golfers (non-professional) covering the golfing equipment against accidental loss or damage, whilst in golf course or in transit, personal effects of the insured against Fire and Theft while in or at any golf club and liability of the insured against any third party for bodily injury and/or property damage while playing or practicing golf by the former in any golf course.

“Goods” means goods in the nature of merchandise, and does not include personal effects or provisions and stores for use on board

Goods Carriage
Means motor vehicle constructed or adapted for use solely for the carriage of goods, or any motor vehicle not so constructed or adapted when used for the carriage of goods.

Goods In Trust or on Commission
The person who holds the property of another either in trust or commission is deemed to posses an insurable interest in such property> he can accordingly insure them in his name.

Goods sent on approval
One of the terms of sale of goods. Here the property in the goods passes from the seller to the buyer

a) When the buyer signifies his approval to the seller or does any act adopting the transaction
b) If he does not signify his approval but retains the goods without giving notice of rejection within the time stipulated in the contract, or if no time has been fixed, within a reasonable time.
Seller has insurable interest in the goods until one of the above two alternatives takes place.

Reputation of a business, expressed in monetary value. Normally Goodwill is not insured by the property insurers as there is no yardstick by which it can be measured.

Graded Retention
Any One Risk Retention in a pro-rata treaty are ‘top’ and graded. This would mean that the direct insurer has a maximum limit of retention which may reduce in respect of specific cases of risks based on qualitative analysis of the risks. Reduction in retention means corresponding reduction in surplus treaty capacity also because of line limitation.

Gramin Personal Accident Insurance (G.P.A. Policy)
A special personal accident insurance policy introduced for the benefit of the people living in rural areas of the country. With a sum insured per individual as Rs.10,000 at a premium of rs.5 only the policy provides cover against death, loss of limbs and/or eyes and permanent total disability arising out of any accident.

Grievous Injury
Any injury that endangers the life of the person or causes the sufferer to be in severe bodily pain or unable to follow his ordinary pursuits for a number of days. This term is specifically used in connection with “Hit and Run” motor accident cases where a specified compensation is payable for grievous injuries.

Gross Domestic Product
Measurement of the values of all goods and services produced in a period of a year.

Gross Loss
Loss incurred by the Direct insurer for the 100% of any one risk insured by him

Gross National Product (GNP)
Total final value of goods and services produced in a national economy over a particular period of time, usually one year. The GNP growth rate is the primary indicator of the status of the economy.

Gross Negligence
Reckless action without any regard to consequences.

Gross Net Premium Income
When net account of a company is protected by an XL Cover, the premium for the net account is pro-rata to the line retained on risks. Such net account premium is Gross Net Premium of the Company. The word gross signifies that the premium is before any deductions

Gross Premium
The premium paid by the policyholder

Gross Profit
The sum insured in respect of the Consequential Loss Policy is based on the Gross Profit of the business. It represents the sum total of the Net profit and the insured standing charges, or if there be no Net profit, the amount of the insured standing charges less such proportion of any trading loss as the amount of the insured standing charges bears to all the standing charges of the business

Gross Rate
The sum of the pure premium and a loading element.

Gross Vehicle Weight
Means in respect of any vehicle, the total weight of the vehicle and load certified and registered by the Registering Authority as permissible for the vehicle

The term is deemed to include all periods during which the aircraft is not in flight, taxying or moored

Group Discount
Discount allowed in the premium arrived as per manual or prospectus rates depending upon the number of persons covered under a Group Personal Accident or Group Medicalim Insurance Policy. Group Discounts are also allowed in the Industrial All Risks Policy, Householder’s Comprehensive Insurance Policy, Shop Keeper’s Package Policy also, where the discount depends upon the number of sections of coverage availed.

Group Insurance
Insurance coverage for a group of individuals engaged in some common activity. Ex.Employees of an organisation, members of an association of professionals, farmers registered as a society for rural activities etc. Insurers issue group policies in accident insurance, medical insurance, professional indemnity insurance, etc.

Group Mediclaim Insurance
Mediclaim Insurance Policy issued in favour of an enterprise or an organisation or any employer, to cover their employees and dependants. These policies are also issued to associations, clubs etc. for the benefit of their members. The essential requisitst for a group policy are: Some common relationship among the persons to be insured and a central point for administration of the policy scheme.

Group Personal Accident Insurance
Personal Accident Insurance Policy issued in favour of an enterprise or an organisation or any employer, to cover their employees ( and dependants also sometimes). These policies are also issued to associations, clubs etc. for the benefit of their members. The essential requisitst for a group policy are: Some common relationship among the persons to be insured and a central point for administration of the policy scheme.

Growth Rate
Percentage change in the quantum of business when compared with the business in a base year. Growth rate in business of every year over the business in the previous year is assessed by the insurance companies to assess the business performance vis a vis the target fixed, analyse the reasons for shortfall if any, and to take corrective measures as are needed. Growth Rates in business of the individual Field Personnel is also assessed, every year, for ascertaining the individual employee’s eligibility for annual increment and growth incentive as per scheme.

Hazardous substance
In relation to The Public Liability Insurance Act, 1991, means a list of chemicals with quantities categorized as hazardous substances and published in the form of a Notification by the Central Government for application of Public Liability Insurance Act. The Act Provides for public liability insurance for the purposes of providing immediate relief to the persons affected by accident occurring while handling hazardous substance (See “Public Liability Insurance Act. 1991”)

Hit and run motor accident
Accident arising out of the use of motor vehicle or motor vehicles the identity whereof cannot be ascertained in spite of reasonable efforts for the purpose.

Hague Rules
Following an International Maritime Law Conference in Brussels in 1922 a set of rules was agreed to establish the rights and immunities of carriers in respect of the carriage of goods by sea. Many of the countries agreeing to the rules later incorporated them in statutory Acts, such as the Carriage of Goods by Sea Act, 1924.

Hail Risk Insurance
Insurance against Hailstorm for Crops given as a part of the Crop Insurance Cover.

Hand Appliances
Any of the portable fire extinguishing devices containing chemicals to put out a fire. Hand appliances are basic requirements for a risk to be considered for a discount in the fire premium rating under a Standard fire and special perils policy. (See “F.E.A. Discount”)

Hard Market
Market Situation where competitive pricing is at a minimum as companies charge the premiums necessary to meet their underwriting losses in order to avoid insolvency and boost capacity; usually associated with a sharp decline in capacity. See also Soft Market

A condition which may create or increase the chance of loss arising from any peril

Hazardous Goods
Goods in any state (solid, liquid or gas) susceptible to the risk of fire in varying degrees according to their physical properties. Hazardous Goods are categorised as I, II, III and IV and rated accordingly, for the purpose of insurance, under the Standard Fire and Special Perils Policy.

Hazardous Risks (Fidelity Guarantee Insurance)
Risks considered not good for insurance because of the very high hazard associated therewith and the high incidence of claims. (Ex. Jewellery Sales persons, Cashiers in eating houses, cinema houses and other places of entertainment, Treasurers of societies or associations, employees of bullion merchants and of works of art dealing in antiques fur and valuables.)

Hazardous Sports
In relation to Personal Accident Insurance, refers to sports activities which carry with them high hazard, like racing on wheels or horseback, big game hunting, maountaineering, winter sports, skiing, ice hockey, balooning, hang gliding, river rafting, polo etc. Persons engaged in these sports are classified as high risk groups and attract extra premium over normal, if the proposal is accepted by the insurer.

Health Insurance Business or Health Cover
Means the effecting of contracts which provide sickness benefits or medical, surgical, or hospital expense benefits, whether in-patient, or out-patient, on an indemnity, reimbursement, service, prepaid, hospital or other plans basis, including assured benefits and long-term care.

Heating and Sweating
The former is a risk which exists in respect of cargo prone to heating by spontaneous combustion.e.g. Coal, oil cakes etc. in bulk. Sweating refers to the water damage caused by condensation of water in the vessel or container hold, under circumstances of different climatic/atmospheric conditions during the voyage.

Heating or drying process
A process carried out in a manufacturing unit where by certain property is heated and dried to remove the water contents. Any loss/damage to the property due to over heating or drying is not covered under a standard fire and special perils policy.

Heavy Industry
Traditional Production Industries in the automobile, steel, rubber, petroleum and raw material areas, requiring high capitalisation and producing large quantities of output. Heavy Industry employs many people and is often beset with environmental impacts.

Strategy adopted by importers or exporters in connection with future purchases or sales, to overcome the loss caused by price increase or decrease as the case may be due to exchange fluctuations. Protection is obtained by hedging against exchange movements by entering into forward contracts.

Robbery with violence or threat of violence. A risk which is covered under the Standard Burglary Insurance Policy

Homogeneous Exposures
Risks within a group under study that have, to a great extent, uniform characteristics as regards exposure to similar loss events and expectation of losses. Study of homogeneous exposures is carried out for the purpose of fixing rates of premium and terms and conditions in connection with insurance coverage

Homogenous Risks
Properties, interests or activities which are exposed to mostly similar types of perils and which normally meet with similar loss situation in the event of such perils occurring. Insurers consider homogenous nature of risks by evaluating them according to a) cause and b) effect with the aim of quantifying probabilities and severity in order to fix uniform rates of premium, terms and conditions coverage etc.

Honey Bee Insurance
Coverage for hives and/or bee colony belonging to the co-operative societies against all accidental losses or damages to them. Settlement of claim is as per agreed value representing the cost of hive and cost of bee colony which will be attached to the policy in the form of a valuation table.

Hospital Confinement Indemnity Insurance
Insurance Coverage to provide for a fixed compensation on a daily basis for the period of treatment in a hospital or a nursing home by the insured for any illness, injury or sickness, as against the conventional mediclaim policies which provide for reimbursement of actual expenses incurred for treatment.

Admission of a patient in a hospital or a nursing home and treatment to him for injury, illness, sickness or disease.

Hospitalisation Insurance
Insurance Coverage to individuals providing for reimbursement of expenses incurred towards hospitalisation treatment in connection with any injury, illness, sickness or disease. The cover is extended for domiciliary hospitalisation also under ceratin conditions. Individuals, as also their dependants can be covered under the policy.

Hostile Fire
A fire which does not confine itself to its normal bounds and spreads beyond its habitat. For example the fire in the gas stove spreads to the nearby items and results in a big fire. A Hostile Fire is covered under the policy which is extended to cover Fire Risks.

Hot Testing
In relation to project insurance, refers to

I) operational tests, which include the checking of parts, elements and/or production lines of insured property under full or partial load and normal or simulated operating conditions including the use of feedstock or other material for normal processing or other media for load simulation. In electrical power stations hot testing means checking after connection to a grid or other load circuit of electrical generating, transforming, converting or rectifying equipment.

II) commissioning tests/acceptance tests which in turn mean operation of insured property under production conditions for the purpose of attaining (quantity, quality) specification requirements.

Hours Clause
A Clause incorporated in XL Reinsurance wordings to define Any One Event of Loss for the purpose of loss recoveries from the XL Cover. As per this clause Any One Event is defined by consecutive number of hours as per details below:

72 consecutive hours are taken as one event for Storms, Earthquake, Tidal waves, Seaquake, Volcanic Eruption.

168 consecutive hours are one event in case of floods.

Man-made catastrophic losses caused by riots and civil commotion are defined as 72 consecutive hours for one event in any one city.

168 consecutive hours are taken as one event for any other catastrophe.

” A person is said to commit house breaking who commits house trespass if he effects his entrance into the house (or any part of it), for the purpose of committing an offence, or having committed an offence therein, he quits the house (or any part of it), such entrance or exit being made in the six ways as described in the Penal Code”

Householders Comprehensive Insurance
A package of insurance designed to provide householders with a broad range of property and liability coverage, pertaining to events at home as well outside.

Hull Insurance
Insurance on the ship, its machinery and equipment

A tropical storm marked by extremely low barometric pressure and circular winds with a velocity of 125 Kilometers an hour or more.

Hurricane Insurance
Part of a group of perils namely “Storm, Cyclone, Typhoon, Tempest, hurricane, Tornado, Flood and Inundation” which is inbuilt in the coverage under the Standard Fire and Special Perils policy. This group of perils can, however, be opted out by the policyholder, if he desires to reduce premium cost.

Hut Insurance
An insurance coverage to dwelling huts in rural areas constructed with financial aid from Banks/Co-Op/Govt. Institutions. Cover is against Fire, Earthquake, Flood and Inundation, Storm, Impact damage , Riot and Strike, Terrorism, Malicious damage etc. Huts are insured for an agreed value of Rs.6000/- each.

Hydrant System
A large discharge pipe system with valves at various places for drawing water from a water-main. Installation of Hydrant System together with the existence of Hand Appliances will entail the insured to a discount in the premium rate under the standard fire and special perils policy.

Immediate Repairs
Vehicle needing minor repairs to be carried out following an accident when without that it can not be moved from the place of accident to the repairer’s garage. This expenditure incurred by the insured is allowed under the policy lest there should be aggravation of damage to the vehicle if not removed immediately.

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. An implied warranty must be strictly complied with. In the event of a breach of the warranty the insurer is discharged from liability as from the date of the breach, but the insurer may waive the breach or the breach may be excused by statute. Due diligence is an example of implied warranty in respect of all policies. Seaworthiness and Legality of Adventure are two examples in relation to Marine Insurance

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.

Identification of Animal
The methods used for recognition. Identification of the animal at time of insurance is essential so that the claim is settled only for the animal to which the cover was provided.

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.

Any betterment effected in either a building or equipment through expenditure of money or labour which is more than required for a mere replacement or repair or restoration to the original condition. Property insurance policies do not normally cover the increase in cost incurred for any such improvement in an item which was affected by an insured peril.

Imputed Negligence
Case in which responsibility for damage can be transfered from the negligent party to another person, such as an employer.

In course of employment
The term which is applicable in respect Workmen’s Compensation or the Employer’s Liability Insurance, is defined by the courts as commencing at the end of the individual’s journey from his house and stops at the commencement of his return journey, unless the employee is rendering service to his employer or is discharging some obligation imposed upon him by the contract of employment even outside his work place.

Inadvertent Error
Mistake or fault committed unintentionally, accidentally. Property Insurance Policies admit claims for loss/damage caused to the insured property by an insured peril, resulting from such inadvertent errors of the insured or others.

In-built XL Protections
Protection of a quota share treaty by a common account XL protection which is in-built. Reinsurers of quota share have to avail XL protection compulsorily and pay the XL premium cost.

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.

Incidental Contract
Incidental (and not the main) reason for forming a contract. This is relevant in respect of Group Insurance Policies like Group Personal Accident Insurance or Group Mediclaim Insurance where the group should exist for some other homogenous functioning and should not have been formed only for availing a group policy with an intention to get premium discounts. Eg. Employees of a firm or company, members of a co-operative society or association or club etc.

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. It modifies some of the existing terms in an updated format for ease of use and also for providing traders, lawyers, transport officials and insurers with a modern text reflecting the latest changes in the trading environment.

Cash flow from all sources, normally expressed on an annual basis

Income Recognition
Normally all the interest due in the accounting year on any investment is reckoned as income of the year. However in respect of non-performing assets RBI guidelines specifically prohibit recognition of interest on these NPAs as income once, such interest is not paid on due dates. Therefore interest on such NPAs will not be treated as income even though the same may accrue within the Accounting year.

One who is not legally capable of entering into a contract. Ex. Mentally ill, minors etc. Contract of Insurance entered into with an incompetent person is not legally valid.

Increase in Cost of Working
This is the abnormal expenditure incurred by the insured to avert or minimise the adverse effect on the business arising out of the property damage and the consequent business interruption so that loss on the net profit and the standing charges would get avoided or at least minimised. Examples of such expenditure are rent for temporary premises, overtime wages to hasten the process of repairs to the damaged item, hire of machinery until affected one is set right etc.

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. For all practical purposes this is arrived at by taking the claims paid during the policy year plus the loss reserves as at the end of the policy year, minus the corresponding reserves as at the beginning of the policy year. The difference between the year end and beginning of the year loss reserves is called the increase/decrease in reserve and may be added/subtracted directly to/from the paid claims to produce the incurred loss.

Incurred Loss Ratio
The ratio that the incurred loss bears to the gross premium

Incurred-but-not-Reported (IBNR) Reserves
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

Indemnifiable Loss
Loss recoverable under the policy in view of its being caused by peril insured against

Indemnification of Loss
Compensation to the victim of a loss, in whole or in part, by payment, repair, or replacement.

Recipient of an indemnity payment

Provider of an indemnity payment

To compensate the sufferer of the loss to the extent of the loss suffered by him

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 will start either from the time of the damage to the property or afterwards depending upon exactly when the business results will get affected and continue until such time when the business activities are wholly resumed and reach normalcy. 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.

Adjusting of values over time to reflect the impact of inflation

Inductive Reasoning
Type of logic that makes the assumption that what has happened in the past will happen in the future, given the same conditions surrounding the two occurrences.

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. While consequential loss by fire and allied perils is compulsory as a part of the package, Machinery loss of profit cover is optional.
Minimum Sum Insured under the policy should be Rs.100 crores. This Policy is specially rated as per the guidelines of the tariff advisory committee

Inevitable Accident
Accident , to which no fault can be attributed to anybody.

Infidelity Exclusion
In relation 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.

Rise in the prices of goods and services as happens when demand increases over supply.

Inflation Factor
Adjustment in property insurance to reflect increased construction costs. See “Escalation Clause”

Inflation Rate
Rate of increase in prices of goods and services.

Information Technology Insurance Policy
Policy providing coverage to Information Technology companies or Organisation against their civil liability for any claim for

a) breach of duty or
b) for brach of contract where the act, error or omission giving rise to the breach of contract also gives rise to breach of duty
c) breach of confidentiality or
d) defamation
in respect of any information technology services or information technology products that are provided by the insured in the conduct of their business. Defence cost are also payable provided the defence of any claim against the insured is undertaken with the consent of the insurer.This is normally a claims made policy.

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.

Performing of some organisational functions within an organisation without having the services of outside agencies who carryout and/or specialise in such functions. In general insurance there exists the practice of in-house loss surveyors Lawyers for part of the organisations’ function in the respective areas.

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, wilful misconduct of the insured, ordinary losses, delay and insufficiency of packing.

Outer Covering containing an Insurance Policy. Normally it furnishes brief details of coverage, exclusions, conditions etc relating to the insurance cover granted.

Jackup Rig
In relation to energy risks, an offshore drilling structure with tubular or derrick legs that support the deck and hull. When positioned over the drilling site, the bottoms of the legs rest on the seafloor. A jackup rig is towed or propelled to a location with its legs up. Once the legs firmly positioned on the bottom, the deck and hull height are adjusted and leveled.

Throwing overboard of a cargo. A step resorted to by the captain of the vessel to save the vessel and/or other interests in the vessel in time of common peril. Claim for loss of cargo so jettisoned is recoverable under the marine insurance policy subject to any of the Institute Cargo Clauses as long as the common peril is an insured peril.

Jan Arogya Bima policy
Policy specially designed to provide cheap medical insurance coverage to poorer sections of the society. The coverage is broadly along the lines of the mediclaim policy for individuals. Individuals and their family members can be covered. Age limit is 5 to 70 years. Children between the age of 3 months and 5 years can be covered provided one or both parents are covered concurrently.
Sum Insured per person is Rs.5000.

Janata Personal Accident Insurance (Group)
Policy exactly similar to the Janata Personal Accident Insurance Policy for Individuals issued for a group of persons in the same manner as in the case of a group personal accident insurance policy

Janatha Personal Accident Insurance (J.P.A)
An accident insurance cover specifically for the rural people and the common man. Covers death AND permanent total disablement due to accidents Minimum and Maximum Capital Sum Insured is Rs.25000 and Rs.1 lakh respectively. Long term cover up to 3 – 5 years also are provided with a discount on the cumulative premium.

Jewellers Block Policy
An insurance package for the needs of the jewellers. The policy covers
• Stock-in trade of jewellers kept in the premises
• The stock whilst in the custody of the partners/employees and the insured’s agents
• The stock whilst in transit by insured post parcel, air freight and through angadias/couriers as also
• The office furniture, fixtures and fittings in the premises and safes at residence of concerned persons.
against fire and allied perils, burglary and theft. The policy can be further extended to cater to any other specific needs of the jewellers.

Joint Account XL Covers
Also called Common Account XL Covers which are arranged to protect both retained quota and reinsured quota on each and every risk. This arrangement is also called “Reinsurance for Joint Account (RFJA)

Joint and Several Liability
A legal term used in the definitions of liability , meaning that a decree in a court of law, if made joint and several, may be enforced against all the parties sued against or against any one of them separately.

Joint Cargo Committee
A committee formed by the Lloyds and Company Underwriters to deliberate on issues concerning cargo insurance and to make recommendations for uniform implementation.

Joint cargo Survey
A joint survey attended by the surveyor of the carrier and the surveyor appointed by the cargo owner/cargo underwriter in case of a loss to cargo.

Joint Hull committee
A committee formed by the Lloyds and Company underwriters to deliberate on issues concerning Marine Hull Insurance and to make recommendations on premium rates policy terms and conditions for uniform implementation.

Joint Hull Survey
A joint survey conducted by the surveyor appointed by the insured and the surveyor appointed by the insurer in case of an accident to the insured vessel resulting in a claim under the policy. Surveyor from the classification society may also participate in the survey in case the class of the vessel is to be certified after repairs to the vessel.

Joint Hull Understandings
Understandings reached among the Hull Underwriters in the London Market with a view ensure uniformity of approach on principles and practices concerning Hull Insurance

Journal Entry and Journal Book
Every accounting is made by a double entry i.e. debiting one account and crediting another account. For some of the major items, a separate book is maintained to record the transactions like cash book, purchases book, sales book etc. In the case of an insurance company the same could be premium registers, claim registers, commission register etc. All these books will serve the purpose of a journal entry for debiting or crediting the account head for the total of the transactions. Apart from these books, there could be other transactions which are accounted by passing journal entries for each transaction. Such journal entries are entered in Journal Book.

Determination of a court of competent jurisdiction upon matters submitted to it

Judgement by Default
Judgement delivered in a court in the absence of one of the parties to the litigation, either plaintiff or defendant.

Judgment Rating
Rate-making method for which each exposure is individually evaluated and the rate is determined largely by the underwriter’s judgment.

Just Compensation
Full Indemnity by the insurer for the loss sustained by the insured.

Kenney Ratio
Proposal by Roger Kenney, an insurance journalist, that in order to maintain the solvency of a property and casualty insurance company, insurance premiums written should not exceed more than twice the company’s surplus and capital. This historical measure is used by regulators to determine the company’s claim paying capacity while maintaining its solvency.

The term, used In energy risks, refers to entry of water, gas, oil, or other formation fluid into the well bore. It occurs because the pressure exerted by the column of drilling fluid is not great enough to overcome the pressure exerted by the fluids in the formation drilled. If prompt action is not taken to control the kick or kill the well a blowout will occur.

Kidnap-Ransom Insurance
Insurance coverage providing for payment within the limit specified in the policy of ransom demanded by kidnappers of the insured.

Key Person Health Insurance
An individual or group insurance policy designed to protect a firm against the loss of income resulting from disability of a key employee.

The term, used in energy risks, refers to the following:

1. In drilling, to prevent a threatened blowout by taking suitable preventive measures (e.g. to shut in the well with the blowout preventers, circulate the kick out, and increase the weight of the drilling mud)

2. In production, to stop a well from producing oil and gas so that reconditioning of the well can proceed.

Kindred Perils
Perils of the same kind. Ex.Burglary &Robbery- Storm & Hurricane.

Knock-For-Knock Agreement
In relation to Motor Insurance, agreement between two or more insurers to the effect that in the event of collision between two motor vehicles insured with two of them separately, each insurer will bear the loss with regard to the vehicle insured with them without going into the cause of which vehicle has caused the collision. There is however no effective implementation of this agreement by the insurers because of various reasons.

A ship’s unit of speed – a nautical mile (i.e. generally 6080 feet – 1.151 statue miles or 1853 metres) per hour.

Known Loss
A loss about which the insured and/or the insurer is aware at the time when insurance is effected

Listed Companies
Companies whose shares are listed for trading in Stock Exchanges. The respective Stock Exchange in which the shares are listed prescribes Regulations for these Companies regarding publication of their accounts and disclosure of various information and details. Hence the listed Companies may be said to be more transparent.

Losses discovered or claims made basis
The term, In relation to excess of loss reinsurance treaties, means that all losses discovered, reported or made during the period of the treaty irrespective of the inception date of the original policy or policies or of their occurrence. This type of cover is sometimes used when it is difficult to pinpoint an exact date of occurrence, e.g. Fidelity Guarantee Policies

Losses occurring basis
In relation to excess of loss reinsurance treaties, the cover provided under the arrangement being on losses occurring basis, meaning that all losses occurring during the period of the treaty irrespective of the inception date of the original policy or policies (issued by the reinsured to the original insured) are covered by the treaty.

“Largest Claims Reinsurances” is a method more suitable to Liability Reinsurances where a statistical survey of large losses is taken on last five years and a prescribed limit of largest loss is fixed so that reinsures are made liable to pay only those losses which cross that limit.

L.P.G. Gas Dealers Insurance
A comprehensive insurance package for the benefit of the L.P.G. gas dealers providing cover for the insured, office and service persons, building and fixtures, contents including gas cylinders, furnitures etc. against accidental personal injury and property damage , insured’s liability to his employees under workmen’s compensation act and also his liability to third parties and insured’s financial loss arising out of any act of infidelity on the part of his employees.

Label Clause
A clause significant to Marine Cargo Insurance. In respect of canned or similar type of goods which are labeled for product identification purposes, where such labels will be damaged by contact with water or other cargo, insurers liability will be restricted to the cost of re-packing and re-labeling only as per this clause.

The period that has elapsed between when claims actually occurred and when actually paid

Landed but Missing
Situation where an import or export cargo would be lost after landing at the destination port, because of theft, over issue or wrong carriage to some other place. In all such cases Port Trust Authorities would, after a search, issue a certificate known as Landed But Missing Certificate or C certificate.

Landing Remarks
Remarks made by the dock authorities in their record, showing marks & nos., weights, condition etc. of the goods landed. Insurers would require an extract of this record in respect of a claim for loss or damage to the insured cargo as an evidence for the stage at which the loss to cargo could have taken place.

Lapsed Policy
An insurance cover which has come to a close earlier to the original date of expiry as stated in the policy, because of non-payment of premium by the insured. As regards non-life insurance this would arise only in respect of Marine Hull policies or other policies issued for periods greater than one year where the facility of installment premium payment is extended. When the insured fails to pay the installment on or before the due date, the policy will lapse on the due date.

Large Losses Information
nformation on large losses is provided to reinsures for the purpose of reviewing the performance of a treaty, be it proportional treaty or excess of loss.
In relation to a proportional treaty, a loss is called a “large loss” when it exceeds the “Cash Loss Limit” provided in the treaty wordings.
In relation to an excess of loss reinsurance, a loss is called a “large loss” when it exceeds 50% of the underlying limit

Latent Defect
Term used to refer to any hidden flaw or defect in the structure of the ship or machinery which is not readily discoverable by a competent person using reasonable skill in an ordinary inspection. Any loss/damage caused by a latent defect is recoverable under a Marine Hull Insurance Policy which provides coverage as per I.T.C. (HULLS) or I.V.C. (HULLS)

Law of Large Numbers
Concept that the greater the number of exposures, the more closely will be, the actual results to the expected results and greater the credibility of predictions. This law forms the basis for arriving at the statistical expectation of loss based on which the insurance premium will be fixed for different risks.

Lawful Adventure
An implied warranty in respect of marine insurance contracts to the effect that the adventure must be legal.

Lay up Warranty
The hull policies covering minor vessels such as fishing vessels and sailing vessels carry a “Lay-up Warranty” providing that the insured vessel be laid up out of commission during a specified period viz. monsoon or winter months. The vessels may be laid up afloat, or on mud or the “hard”.

Layout Plan
A representation of the shape of horizontal section of a building. The shape of the building at the ground floor is always taken and by adding further details, the plan is built-up so as to incorporate all featuraes of all storeys and also of the roof. Plans contain clear and concise form of important matters which can not be covered by an inspection report.

Lay-Up Returns
– In Marine Hull Insurance, Scale of Premium Refund agreed by the International Marine Insurance Market when the insured vessel should be laid up during the period of insurance. As the risk to the insurer during lay-up period would be very less when compared to the risk during navigation of the vessel, return of premium is allowed by the insurer for the laid-up period. This return of premium is subject to certain conditions imposed by the insurer.

Motor Insurance, If vehicle is laid up in the garage, risks covered under a Motor Comprehensive Insurance Policy are restricted to fire, burglary and theft.

Lead Insurer
The insurer among the coinsurers in respect of any risk jointly insured by them, who has greater share than others. Leader or the lead insurer will deal with the insured on all matters connected with the insurance coverage including full premium collection, document issue, other clients’ servicing matters including settlement of claim for the full assessed loss etc. It is customary for all coinsurers to issue to the leader letter of authority to facilitate the leader to carry out all the above functions on their behalf which would be binding on them. Normally Ex-gratia settlement of claims do not come under this arrangement. Periodical settlements will be effected as between the leader and the coinsurers in connection with release of coinsurer’s share of premium and collection of their share of losses.

Leader/Leading ReiInsurer
Generally an Excess of Loss Reinsurance Treaty Terms are negotiated with a leader who quotes rates and other terms and supports with a lead share. A reputable leader’s lead makes it easy to complete placement with good securities. Generally other reinsurers agree to follow the leader.
On a proportional treaty generally there is no leader but there may be a leading reinsurer with a large share.

Leakage from Automatic Sprinkler Installations
Accidental discharge or leakage of water from an automatic sprinkler installation arising out of damage to the sprinkler head by impact from some object or heat from some source other than fire causing sprinkler head to operate. Loss/damage to an insured property due to such leakage of water is covered under the standard fire and special perils policy.

Contract whereby the owner of some fixed assets like building, equipment, furniture etc. allows the usage by the contracting party of such fixed assets for a specified period of time in consideration of certain payment of amount in the form of rent by the said contracting party. The owner of the leased property is called the Lessor and the user the Lessee.

Legal Liability
Financial Liability towards third parties imposed under Civil Law.

Legal Liability Insurance Policy
Insurance Coverage to provide indemnity to the insured in respect of financial consequences of legal liability. Wherever liability arises under Civil Law, compensation (damages) becomes payable. Besides there may be legal costs awarded against the insured and also legal costs of defence of the claim incurred which are also reimbursed under the policy.

Legal Opinion
Opinion given by a lawyer in respect of an issue, describing what is legal or lawful.

Legality of the contract
One of the essential elements for a contract to be legally valid. Applicable to insurance contracts also. The subject matter of the contract must be legal.

Individual or firm that extends money to a borrower with an undertaking by the latter that such money shall be repaid, usually with interest. Lenders extending loans against assets, whether moveable or immovable have an insurable interest on such assets.

A person to whom a lease is granted. A tenant under a lease

Letter of Credit
A document authorising payment of an agreed sum to a named person at the risk of the issuer. If expressed as irrecoverable the authority cannot be withdrawn.

Letter of Indemnity
Where original policy has been lost or misplaced by the claimant, a letter of indemnity is obtained from him by the insurer to the effect that in case, subsequently, some other person presents his claim on the insurer on the support of the original policy, he will reimburse the claim amount paid to him and also hold the insurer harmless for effecting settlement with him without production of the original policy. This is relevant only in respect a Marine Policy in view of its freely assignable nature.

Letter of Transfer (G.A)
In relation to General Average, refers to a letter obtained from the insured by the insurer after paying on behalf of the insured the general average deposit due to be paid by the insured in connection with a general average. On the strength of this letter the insurer can receive from the shipowner any excess amount of deposit over the actual contribution amount.

Any legally enforceable obligation.

Liability Insurance
Insurance designed to protect the policyholder against financial loss due to liability resulting from injuries to other persons or damage to their property.

Liability Limits
The sum or sums stipulated in an insurance contract upto which an insurance company is liable to meet the claims made by the insured.

Liability of carrier (Carriage by Sea)
Under the contract of affreightment, the carrier is obliged to supply a vessel which is both sea-worthy and cargo-worthy. Besides providing a competent crew to man the ship, he must carry, care for and deliver the goods at destination in the same good order and condition in which they were delivered to him. If on account of failure on the part of the carrier to discharge his duties, the cargo suffers any loss or damage, he is liable to make good the loss to the cargo owner. The shipowner’s liability towards cargo is limited by statute. The carriers’ liability to cargo is insured through P & I Clubs and not in the ordinary marine insurance market.

Legal authority given to a company , agent , broker or a consultant to transact insurance business within the framework of applicable laws and/or acts and/or regulations that are in force.

License Fee
Sum paid by an insurance company or other firms or individuals as fixed by the Regulatory Authority for transacting business as per the authority granted by the License.

A legal right which one possesses over the property of another until the latter has satisfied a liability towards the former. (Ex. A carrier has a lien on the cargo carried by him until the freight for carriage has been paid)

Life policy for 2 wheelers
Insurance policy for two wheelers covering third party risks and remaining in force so long as vehicle is validly registered. This will provide continuous cover for third party liability to small vehicle owners.

Lift (Third Party Liability) Insurance
An Insurance Policy designed for owners of passenger lifts in buildings to take of their liabilities arising out of the use and operation of the lifts. Policy provides indemnity for the legal liability of the insured for payment of compensation to third parties for loss of life or bodily injury or for the damage to the third party property.Legal expenses incurred by the insured with the consent of the insurer for defending any legal action against the former by such third parties will also be payable under the policy. The policy will contain two limits one for any one accident and another for all the claims during the period of the policy which will represent the insurer’s maximum liability.

Light Motor Vehicle (LMV)
A transport vehicle or omnibus, the gross vehicle weight (GVW) of either of which or a motor car or a tractor or a toad roller, the unladen weight of any of which does not exceed 7,500 Kgs.

A flash of light in the sky caused by the discharge of atmospheric electricity from one cloud to another or between the cloud and the earth. Lightning may cause crevices in a building or fire damages. Lightning is a peril covered under the term “Fire” in relation to the Standard Fire and Special Perils Policy.

Limit for Any One Loss
Refers to amount of maximum liability of the insurer under the policy for any one loss or series of losses arising out of one event

Limit of Liability
This is the monetary limit to which the insurer/ reinsurer is liable for any one risk. When It relates to reinsurance it is expressed either on a sum insured basis or on P.M.L.(Probable Maximum Loss) basis.

Limit of Loss with Reinstatement Provision
In an Excess of Loss Reinsurance Treaty there is limitation to aggregate losses payable during the cover period by the Reinstatement Provision. If such limit is exhausted before the expiry date of the cover the XL Cover will become dead before the expiry date.

Limit per accident
Maximum liability of the insurer in respect of all claims arising out of a single accident.

Limit per bottom
This represents the maximum limit upto which any single shipment will be covered under the open cover by the insurer. ‘Limit per bottom’ clause will appear in all open covers covering imports or exports.

Machinery Breakdown Insurance (Machinery Insurance)
Insurance for plant and machinery, providing cover against all kinds of accidental Electrical and Mechanical Breakdown due to internal and external causes. Cover is in force during the time machine is in operation or at rest or in process of dismantling and overhaul or during subsequent re-erection at the same premises. The principal exclusions are all those perils which are covered under a Standard Fire and Special Perils Policy as also willful negligence, war, gradual deterioration etc.. The rates, terms and conditions of this cover are governed by tariff.

Made Good Amounts
The term that is associated with General Average refers to the value of the property, which has been sacrificed as a part of the general average measures that is paid to the owner of the cargo from out of the general average contribution made by all those whose property or other interests, which have been saved.

Mailing List
Compilation of possible customers prepared as a list for use in direct-mail solicitation.

Maintenance Warranty
A warranty incorporated in the E.D.P. Equipment Insurance Policy, warranting the existence of a service or maintenance contract with the computer makers.

Major Port Trust Act, 1963, – Limitation
As per Section 120, no suit or other proceeding shall be commenced against a Board until the expiration of one month after notice has been given or after six months after the accrual of the cause of action.

Malicious Damage
Deliberate damage to or deliberate destruction of the insured property or any part of it by the wrongful act of any person or persons. Cover against malicious damage is provided under the Standard Fire and Special Perils Policy as a part of the Riot , Strike, malicious and terrorist damage cover. This cover is also provided under marine cargo insurance and inland transit insurance.

Improper conduct of a professional in the performance of his duties, done either intentionally or through carelessness or ignorance. Negligent or unskillful performance of duties where professional skills are obligatory.

Malpractice Insurance
Coverage for a professional, such as a medical practitioner or lawyer, against liability claims resulting from alleged malpractice in the performance of professional services. (See also “Professional Indemnity Insurance”)

Managed Care
Health care systems that integrate the financing and delivery of appropriate health care services to covered individuals by arrangements with selected providers to furnish a comprehensive set of health care services.

Statement prepared by the master of a ship, of all the cargo carried in the ship. This document is depended upon for comparison in case of short -landing of any cargo either totally or partially from the vessel or the details of all the cargo in case the vessel is totally destroyed by any of the maritime peril. A copy of the manifest is kept on board the vessel for cargo identification in case of any necessity.

Manufacturers Stocks
Consist of Raw materials, Stock-in-process and Finished goods

Manuscript Insurance
Cover designed to suit the particular needs of an insured, when a standard policy can not serve the purpose.

Marginal Well
In energy risks, vessel that is approaching depletion of its natural resource to the extent that any profit from continued production is doubtful

Marine 50/50 Clause
A special clause attached to the project insurance policies (Erection All Risks), where the marine portion of the cover is not insured with the same insurer. The clause provides that the insured should undertake to inspect all packages containing project materials as they arrive at the site for possible damages sustained by the materials during transit as they may have to be excluded from the project insurer’s liability.
The clause further provides that in the event such an inspection is not possible immediately on arrival and damages are discovered only at a later date when the items are taken up for erection, the liability for such damages will be shared at 50/50 as between the insurer for marine cargo and insurer who has issued the erection all risks policy in question.

Marine Adventure
A voyage or period of time during which cargo is exposed to maritime perils

Marine Cargo Insurance Policy
Insurance in respect of goods and/or merchandise in transit from one place to another by sea, air, rail, road or registered post under the relevant contract of carriage.

Marine Clause
A clause which appears as one of the general conditions in the Standard Fire and Special Perils Policy.
By this clause the insurer is not liable for any loss or damage to the insured property if the said property is at the time of the accident resulting into the loss is also insured under a marine policy inclusive of the peril which has caused the loss, except for the excess over the loss recoverable under the marine policy.

Marine Hull Insurance
Insurance of Ocean-going steamers and other vessels. Hull insurance provides the cover to the hull and machinery of a vessel as to the materials and outfit and stores and provisions for the officers and crew. Policy also covers liabilities.
Policies are also issued to cover loss of freight to the shipowner and disbursements i.e. amounts spent by the shipowner in fitting out the vessel including provisions and stores.
Further policies are also issued to cover vessels in course of construction

Marine Insurance
Broadly concerned with the insurance of

– goods in transit from one place to another by sea, air, rail , road and inland waterways

– ships, covering loss or damage to the hull and machinery of a vessel and ship owner’s various interests and liabilities and

– freight at the risk of the carrier.

Marine Insurance Act, 1906
This Act which came into effect in UK on 1st January, 1907, codified the law relating to marine insurance and is now the basis of the marine insurance principles today.

Marine Insurance Certificate
Whenever an Open Cover is issued to provide automatic and continuous insurance protection to a regular exporter/importer engaged in international trade, insured is expected to declare details of each and every shipment coming within the jurisdiction of the open cover as and when the shipment would take place and the particulars are available. As the open cover is only an agreement between the insurer and the insured and not a stamped document, insurer will issue a specific stamped certificate against each declaration after collection of appropriate premium on such individual declaration. Sometimes in the place of the Certificate insurers issue stamped policy for the individual declaration. This stamped certificate of insurance or the policy will be used for all legal purposes.

Maritime Conventions Act, 1911
The act which provides that in the event of collision between two vessel, the degree of blame of the respective vessels in relation to the collision should be fixed in order that the liability of one ship to the other can be correctly assessed. This act does not govern loss of life or personal injury liabilities.

Maritime Fraud
Maritime Fraud occurs when one,or more of the various parties , involved in transactions connected with maritime adventures, acting in collusion,succeed, unjustly and illegally, in obtaining money or goods from another connected in the carriage, trade and financial obligations. They are mainly in the form of

(a) Scuttling of ships

(b) Documentary frauds

(c) Cargo thefts

(d) Frauds in connection with charters.

Market Penetration in General Insurance
(i) Marketing Strategy adopted by the insurer to increase the sales of selected insurance products within an existing market through vigorous marketing techniques.

(ii) Extent to which a particular product or certain identified products are purchased in a particular market.

Market Retention
The extent of capacity available within the local market to accept a risk

Market Share
Percentage share of a company out of the total sales by the entire industry, in respect of all the products marketed, in all the areas of operation, or a specific product, a specific area of operation and so on.

Market Value
Value at which similar property could be normally purchased or sold in the local market. For insurance purposes market value is arrived at after deduction of appropriate value for depreciation of the property based on age, usage, wear and tear and maintenance, from current value

The process of optimising the use of the resources of an enterprise by seeking to identify and satisfy the needs of consumers, actual or potential, in the best way for the enterprise.

Marketing and Distribution Risks
Failure of a firm/company to sell all its produces at not less than the planned price owing to competitors undercutting the price or introducing better products, change in the fashions and the tastes of the customers, general economic conditions or political moves etc.

Mass Communication
Use of widely circulating media, such as newspapers, magazines, television, and radio to inform the general public.

Master Policy
A policy that is issued to an employer or trustee or an association or a society establishing a group insurance plan for designated members of an eligible group.

Material Damage
Physical damage to any tangible property like building, machinery, stocks, furniture, household goods, automobiles etc. which results in reduction in the intrinsic value of such property.

Material Damage Proviso
Every CL (Fire) Policy must contain a proviso that

a) There shall be in force an insurance covering the insureds interest in the property at the premises against such damage; and

b) Payment shall have been made or liability admitted under such insurance
However, this proviso shall not apply to property on which the insured have no direct insurable interest.

Material Fact
A fact which would influence the judgement of a prudent insurer in deciding whether to accept the risk and if so, at what rate of premium, terms, conditions etc.

Material Mis-representation
Misrepresentation of certain facts which will influence the insurer’s judgement as regards insurance of a risk and fixing of rates, terms, conditions etc.

Material Representation
A representation to the insurer which would affect him in accepting the risk or in rating the premium.

Mate’s Receipt
When the goods for export are directly handed over to the captain of the ship, or his assistant called the Mate, he issues a receipt called the Mate’s Receipt. This receipt is subsequently exchanged by a Bill of Lading issued on behalf of the Shipping Company.

A motor vehicle constructed or adapted to carry more than six passengers, but not more than twelve passengers, excluding the driver, for hire or reward.

Named Insured
Individual, firm, industry or an organization, in whose favor and specific name the policy is issued.

Named Perils policy
Policy in which the perils against which the coverage is granted is listed. Insurer will be liable for losses only when they are caused by any of the listed perils.

National Wealth
Sum total of the value of all the capital and goods held within a nation.

Takeover of a private company’s assets or operations by a government. The company may or may not be compensated for the loss of assets.

Nationality of Vessel
Nationality of the vessel is important to the insurer particularly if the vessel sails under a “Flag of Convenience”, as he would not like extend cover for cargo shipped by such vessels and insert a warranty to that in the policy or the open cover. (See “flag of Convenience”)

Natural Gas
Primarily Methane and also some Ethane with small quantities of entrained heavier fractions, such as Propane, Butane, etc. These and others, are readily condensed from the Natural Gas flow and are known as Natural Gas Liquids, as distinct from Liquid Natural Gas (L.N.G.), which is Methane/Ethane refrigerated under pressure to the liquid state.

Natural Losses
Loss or damage caused by vagaries of nature, such as storm, hurricane, floods, lightning, earthquake etc.

Natural Resources
Actual and potential forms of wealth supplied by nature, such as coal, oil, wood, water power and arable land.

Navigational Limits
Limits prescribed by the Port Authorities and the Director General of Shipping with regard to the area of operation of the ships, which depend upon the size, nature and type of the vessels. Insurance Policies also fix territorial limits for operation of the vessel depending upon its use

Failure to use the care that a reasonable and prudent person would have used under the same or similar circumstances.

Negotiable Instrument
A document of title to property that may be transferred from one person to another in the course of business

Negotiated Settlement
Settlement of Claim reached on a compromise basis in cases where there is dispute as regards liability or the quantum of loss payable but that it is felt that a compromised disposal is desirable on mutual interest.

Neon Sign Insurance
Insurance Coverage in respect of loss or damage to the neon sign installation by
(a) accidental external means and
(b) fire, lightning, external explosion and theft.
Insured’s liability to third parties arising out of an accidental damage to the insured neon sign can also be covered under the policy.

Net Loss
Residual Loss to the insured after taking into account realisation from salvage and/or recoveries from third parties if any, but that such salvage and/or third party recoveries shall be taken net of any expenses incurred towards realisation of such recoveries.

Net Premium
The portion of the premium which is designed to cover losses/ benefits payable under the policy, but not the various expenses.The portion of the premium retained by the office after deduction of expenses of management inclusive of the agent’s commission.

Net Premium Written
Total premium written by a ceding company minus premium ceded to the reinsurer.

Net profit
The Net Trading Profit excluding capital receipts and accretions and outlay chargeable to capital. It is arrived at after making provisions for all standing charges but prior to deduction of tax. The Loss of Profit Policy provides cover for the loss of Net Profit and the insured standing charges during the period of interruption to production arising out of a damage in the insured premises by an insured peril.

Net Retained Line Clause
A clause which is applicable to the excess of loss reinsurance cover, which refers to the protection offered by the cover only to the retained net line account of the reinsured. The net account of the reinsured may include the following:

a) Normal Any One Risk Retention as per the reinsurance programme

b) Unplaced share of the proportional treaty after retention.
As per the net retained line clause the excess of loss cover will exclude the second item.

Net Retained Lines
The term, in relation to excess of loss reinsurance treaties refers to the provision that the treaty will only protect that portion of the insurance which the reinsured retains to his net account. The treaty will not protect him if one of the proportional reinsurer under a proportional treaty does not settle his share of loss under the treaty and as a result it reflects back as a liability to be borne by the reinsured.

Net Retention
Extent of capacity which an insurance company puts forth to retain the risk to its own account without any recourse to reinsurance.

Net tonnage
Passenger and/or cargo accommodation expressed in a cubic measurement based on 100 cubic feet equals one net registered ton.

Net Worth Of The Company.
This indicates the excess of Assets over the Liabilities of the Company, which in turn mean, the Sum of the Equity and Preference Capital and Free Reserves like General Reserve of the Company.

New Attachments
The term refers to the acquisition of new vessels to the existing fleet of vessels of a shipowner. The premium rating of such new vessels will depend on the experience of the fleet in addition to the factors such as type, gross registered tonnage,age, sum insured, trading limits of the individual vessel etc. Premium rates for the vessels depend upon the trading limits opted for by the ship owners, such as worldwide, limited trading, port limits, etc.

New Business Clause
A special clause added to the specification in a loss of profit (Consequential Loss) policy. When insurance is arranged for an entirely new business where no past performance figures exist. This clause amends the definitions of rate of gross profit, annual turnover and standard turnover to expand the results from the commencement of the business to the date of damage to give proportionate figures for a complete twelve months. (See ‘Gross Profit’, ‘Annual Turnover’, ‘Standard Turnover’ and ‘Specification’)

No Cession without Retention
It is a condition in reinsurance contracts that the ceding company has to retain a portion of the risk and reinsure only the balance. Contract does not permit reinsurance for 100% of the risk.
This condition is mainly to safeguard reinsurers’ interest to ensure that bad risks are not passed on to them fully.

No Claim Bonus
A reduction as a percentage in the manual or the prospectus premium at the time of renewal of the policy based on favourable claims experience in the previous year/s policy/ies for the same insured property against the same insured perils.

No Claim Refund
Portion of premium agreed under the policy to be refunded to the insured in the event of no claim being reported or paid during the entire policy period. It is customary for the insurance companies to link this with the renewal of the policy, to ensure renewal with them without fail.

No Cure, No Pay
1. A term used in connection with salvage operations of a vessel or cargo in distress. Salvage Award payable to the salvor will be on ‘No cure No pay’ basis in the sense he is entitled for the award only if and when the property is saved.

2. Recovery Agents pursuing recovery from the carriers, will handle the assignment given to them by the insurers on ‘No cure No pay’ basis in the sense that they will claim fee only when they recover some amount from the carriers.

No fault liability
Means that the claimant is not required to prove that the death, injury or damage was due to any wrongful act, neglect or default of any person. The relief provided under the following acts come under “No Fault Liability”

1. Public Liability Insurance Act.

2. Motor Vehicle Act in connection with Road Accident Victims.

3. Workmens compensation act

No Known or Reported Loss
This condition is sometimes stipulated by insurers/reinsurers who base their acceptance of a proposal for insurance/reinsurance subject to no known or reported loss to subject matter proposed for insurance/reinsurance as on the date of their acceptance.

Person, firm or institution whose name is mentioned in the accident insurance policies to be the recipient of the policy benefits in the event of death of the insured person arising out of an accident

Non – Performing Assets
This refers to the Investments which are classified as Non-performing Assets (NPA) as per the accounting policy of the Company. RBI gives detailed guidelines as to how and when an investment has to be treated as NPA which is with reference to the non-payment of the Loan or Debenture when it is due or non-payment of the interest on the Loan or Debenture when due. The amount to be provided for in these cases is mentioned in the RBI guidelines and they are applicable to Banks and Financial Institutions. Insurance Companies may choose to follow these guidelines and provide for the same in the books of accounts.

Non Destructive Testing
Testing a component without actually destroying it or damaging it.

Non Fare paying passengers
Provision in Motor Insurance Commercial Vehicles Policy to cover, in respect of commercial vehicles which are not authorised to carry fare paying passengers, persons connected with the specific journey allowed to travel on payment of additional premium

Non Hazardous
Refers to the physical/chemical properties of a matter of whatever state which present no undue exposure to the risk in question. Normally the premium rates will be the lowest for non-hazardous goods.

Nonassignable Policy
Policy which can not be assigned by the insured to another. Normally property and liability policies are not assignable.

Non-Concurrent Policies
Two or more polcies which cover part only of the properties covered by other policies or which include properties not covered by others. However some property will be common to all.

Process by which property becomes useless, not because of physical deterioration, but because of changes outside the property, notably scientific or technological advances.

Occupancy and Fire Rates
The direct relationship between the use to which the premises is put to use and the likelihood of its exposure to fire. Occupancy of a building is one of the main factors for fixation of premium rate for fire cover.

Occupational Disease
Disease contracted arising out of employment related exposures and conditions. Workmen’s Compensation Insurance Policy provides cover against occupational diseases.

Occupational Hazards
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 the occupation, due to the disability, that can be expected.

Event that results in bodily injury and/or property damage to a third party. As regards liability insurance policies all claims for bodily injury or property damage in relation to different third parties that would have arisen out of one event would be treated cumulatively for application of insurer’s maximum liability in respect of any one occurrence.

Occurrence Basis Policy
A Liability Insurance Policy that covers Claims arising out of events that occurs during the policy period, regardless of when the claim is filed.

Occurrence Limit
Maximum liability of the insurer in respect of all claims arising out of occurrence of one event.

Off Duty Covers
Personal Accident insurance Cover issued to a person for the restricted hours when he is not at work and/or not on official duty. Normally premium charged for this policy will be 50% of the premium charged for a 24 hrs. cover.

Manifestation of willingness to enter into an agreement.

Offer and Acceptance
One of the essential elements for a contract to be legally valid. Applicable for Insurance Contracts also. A contract is completed by one partys acceptance of an offer made by the other party

Person who receives an offer from another. The offeree may accept or reject the offer.

Policies issued basis
When excess of loss reinsurance treaties are concluded on Policies issued basis, the treaty will only cover those policies that have been issued or renewed at dates falling within the period of the treaty.

Policy Proof of Interest. Under an ordinary marine policy the assured has to prove his insurable interest at the time of loss to substantiate a claim. A PPI policy dispenses with the need for the assured to prove his interest at the time of loss. The mere production of the policy is deemed sufficient proof of interest. There are certain insurable interests which, although they exist, are difficult to be established or extent of which is difficult to arrive at. Increased Value of the cargo is an example of the former and Anticipated Freight is an example for the latter.

In general insurance, comprehensive insurance scheme, in favor of an individual or an enterprise or an industry covering assets, personnel, interests and liabilities against a bundle of perils.

P.A. Flight Coupons
Passenger’s Flight Insurance Coupon covers death and/or permanent disability arising out of a bodily injury caused by violent, accidental, external and visible means whilst in or entering into or descending from any aircraft owned and/or operated by a regular airline over a schedule route by which the insured is travelling as a fare paying passenger during the flights specified. Rate of premium is Rs.5/- per Rs.50,000/- for a flight of not more than 24hrs duration.

Package Policy
A combination of two or more individual coverage into a single policy. A Householders Comprehensive Insurance Policy, for example, is a package combining property, personnel and liability coverage for the householder.

Packing List
Statement furnishing details of the contents of a package or a container. This document is required by the insurer in case of a claim for shortage of contents in the package caused during transportation and preferred under the relevant cargo insurance policy. Packing List helps for a comparison of the contents packed with the contents received at destination.

Paid Losses
Total amount of all the losses paid by an insurance company in a given period

Pain and Suffering
Refers to the suffering attributable to the injury sustained by the person in an accident and to any consequential surgical operation. This is one of the heads of damages allowed in relation to any motor third party insurance claim. Past and future suffering, pain, duration and its severity are taken into account. Damages are given both for mental and physical pain and suffering.

Pair & Set Clause
Where the value of certain articles such as a pair of diamond earrings depends on their continuance as a pair or set, the value is drastically diminished if one of the pair or set is damaged or destroyed. Naturally, the insured would prefer to abandon the remaining earring to the underwriter and to claim a total loss. By inserting Pair & Set Clause, the insurer limits his liability to the insured value of the damaged part or lost object.

Assembly of one or more packages on a pallet base and properly secured to it.

This is a special packing method where bundles, bales, cases etc. are placed in wooden platforms and then securely tied. Pallets are then lfted by fork-lifts or cranes and placed into the holds of the vessels.

Qualified Nurse
In relation to Medical Insurance, means a person who holds a certificate of recognised Nursing Council and who is employed on recommendations of the attending Medical Practitioner.

Quarantine Restrictions
As per the Carriage of Goods by Sea Act, the carrier is not responsible for any loss to cargo arising out of the vessel carrying a cargo that is being subject to certain restrictions imposed by the health authorities of the countries involved. However the cargo insurer will consider this as a delay beyond the control of the insured and pay the claims for loss or damage to cargo as long as it has been caused by an insured peril.

Quarrels and Arbitration
In relation to reinsurance, an Arbitration Clause is provided in treaty wordings setting out the mechanism for settling any disputes, quarrels etc. as between the parties to the reinsurance contract by Arbitration.

Quid Pro Quo
Exchange. In relation to insurance the insurer selling a policy of insurance to some one in consideration of the premium paid by the latter.

Quota Share Cum Surplus Treaty
A method of proportional treaty arrangement combining the quota share treaty and the surplus treaty. For example a risk may be ceded on quota share basis of 50%, 50% being the reinsured retention and 50% ceded to the quota share reinsurer. The 50% retained by the reinsured may be further protected by a surplus treaty after fixing the line of retention of the reinsured.

Quota Share Pools
Market Pools are arranged on Quota Share basis where participating member companies make quota share cessions and then share the entire business according to their participation percentage.

Quota Share Treaty
This is an agreement whereby the ceding company is bound to cede and the reinsurer Is bound to accept a fixed percentage of every risk accepted by the ceding company.

Registration Certificate of a vehicle confirming ownership of the vehicle. This document indicates insurable interest on the part of the proposer of insurance. This is verified by the surveyor/insurer in case of a road accident claim pertaining to the insured vehicle.

R.I.V. Policy
Reinstatement Value Policy – A standard fire and special perils policy with reinstatement value clause attached where by Building, Plant and machinery or other fixed assets are covered for their reinstatement or replacement cost enabling the insured to be indemnified in the event of loss for the cost of replacing or reinstating with property of same kind or type when new as on the date of loss. The principle of indemnity is slightly modified in the sense that the insured will be compensated for ‘new’ in the place of ‘old’.

Ratable proportion of Loss
The term relates to treatment of a claim for a loss which is insured under more than one policy. In such a situation settlement will be made each insurer for only his share of the loss, which will be that proportion that the sum insured under his policy will bear to the cumulative sum insured under all the policies involved.

In energy risks, the closing and sealing component on a blowout preventer

Ram Blowout Preventor
In energy risks, a blowout preventer that uses rams to seal off pressure on a hole that is with or without pipe. It is also called a ram preventer.

Rate Guide
Company manual or prospectus furnishing premium rates for various insurance covers as relating to person, property and peril. This will furnish rates for all insurance policies other than those which are subject to tariff rates. (See Tariff Rate). The manual is mainly intended for agents who solicit business and will also contain guidelines for their business procurement.

Rate of Exchange
Price of one currency in terms of another.

Rate of Gross Profit
Gross Profit expressed as a percentage of the turnover. In relation to Consequential Loss Policy, refers to the rate of gross profit earned on the turnover during the financial year immediately before the date of loss suitably adjusted to provide for trend of the business.

Rate of Premium
The pricing factor upon which the premium payable for a particular insurance cover will be based

Rate on GNPI
In relation to excess of loss reinsurance, refers to the premium for the excess of loss cover expressed as a percentage of the Gross Net Premium Income. (See ” Gross net Premium Income”)

Rate on Line
In relation to excess of loss reinsurance, refers to the premium for the excess of loss cover expressed as a percentage of the limit of the excess of loss cover for any one event of loss.

Rate per Mille
Rate of premium calculated per thousand of the Sum Insured

Destruction of productive capabilities in a plant or factory by those opposed to a company management. Sabotage is a malicious act and loss sustained by the insured arising out of the destruction of the insured property by sabotage is recoverable under the malicious act extension.

Safely landed
The term relates to Marine Cargo Insurance. Goods are safely landed when they have been landed in the customary manner within a reasonable time after arrival at the destination.

Safety Audits
A system that brings together the various techniques relating to both the perception of risk and the identification of operative cause and perils. It has been defined as ‘a critical examination of an industrial operation in its entirety to identify potential hazards and levels of risk’.

Said to contain
A term which finds a place in the receipts given by all the carriers in connection with the goods entrusted to them for carriage/transport from one place to another, which are contained in cases or any closed packages. It is then the responsibility of the consignor or the consignee to establish to the satisfaction of the carrier about the description and quantity of the goods in the packages, when any shortage of contents, while in the custody of the carrier is alleged by the consignee at the time of delivery.

Sale Contract
Contract of Sale means contract by which the seller and the buyer agree on the terms and conditions of sale.

Sale of Vessel clause
Provision in the Institute Hull Clauses which provides that the policy is automatically cancelled in the event of change of ownership of the vessel or its management. Continuation of cover in such cases, if agreed by the insurer will be done by the insurer by suitable endorsement on the policy.
In case of cancellation, the insured will be entitled for pro rata daily net premium return.

Art of persuading people to purchase a product or to avail a service.

1.Property which is partially saved from loss or damage.

2.A compensation for salvage services paid under contract.

Salvage Association
An Association incorporated in U.K. It is governed by a Committee drawn from Lloyd’s and Company underwriters. Its main activities consist of

(i) Providing expert advice and supervision of salvage operations

(ii) Undertaking damage and condition surveys of hull and cargo

(iii) Supervision of repairs, towage and voyage approvals

(iv) Site and lay-up surveys

(v) Oil industry damage surveys

(vi) Preparing the case for insurers when important litigation is in prospect

The services of the Salvage Association are available to underwrites, shipowners and others on request from the interested parties. It has offices in many important ports and has a world-wide network of correspondents.

Salvage Charges
In relation to Marine Insurance, refers to the cost incurred by third parties, independent of any contract, towards salvage operations in saving a distressed vessel. Salvage Operations will include towage, refloating, uprighting, or raising-up a sunken vessel. Salvage Charges do not include the expenses of services in the nature of salvage rendered by the insured or his agents, which would be treated as Sue and Labour Charges or General Average, depending on the circumstances.

State of cargo being soiled by atmospheric conditions arising for example from cargo in close proximity giving odors such as oranges tainting tea.

Tally Sheet
Document prepared by the port trust officials recording the description of the cargo and the number of packages as the cargo is landed from a vessel. The document will also record wherever a package is landed not in apparently sound condition. This is known as “landing tally” and requisitioned by the insurer in case of an import claim under a marine insurance policy to verify whether the package which contained the item claimed for landed in a damaged condition thereby indicating that the loss should have taken place in the custody of the carrier.

Tank Containers
Tank containers usually of stainless steel and of size 8 x 8 x 10 and capacity 4000 liters are used to carry dangerous, corrosive, inflammable and toxic chemical substances. These tank containers carry the advantages of easier handling, completely adaptable to integrated transport systems, more effective for volume loading and less expensive than using drums.

Tank Farm
An area at a refinery, terminal or storage depot dedicated to storage tanks and their safety requirements for surrounding space and spillage containment devices

Liquid Bulk Cargo Carriers, which are strongly built vessels to carry bulk liquid cargo like crude oil, petrol, molasses etc.
The speed of the vessel will be 10 to 15 knots. They ply on fixed routes.
Collision damage will result in huge losses. Also the risk of fire and explosion during discharge of cargo is more. There are possibilities of pollution risk also.

Weight of packing in a consignment or unlade weight in a vehicle or container.

Tariff Rate
Rate fixed by the Tariff Advisory Committee in respect of specific property / properties and against specific peril/perils, which will have to be scrupulously followed by all insurers. In almost all cases the rate fixed by the tariff committee is the minimum to be charged for a given situation, leaving it to the individual insurer to charge more if a specific proposal warrants.

Tax Token
Token issued by RTO for having paid required tax for the vehicle. Strictly speaking, payment or non-payment of tax does not vitiate insurance contract and liability under the policy does not get prejudiced.

Taxying (Aircraft)
Deemed to include all movement of the aircraft under its own power other than for the purpose of flight. Taxying shall not be deemed to cease merely by reason of the temporary halting of the aircraft in the course of taxying from one point to another

Tearing apart on account of centrifugal forces
The term refers to insured machine/equipment/apparatus splitting into factions due to the force tending to pull it outward when it is rotating rapidly around the centre. This contingency is not covered under the explosion coverage part of a standard fire and special perils policy.

Television Insurance
Insurance Cover for T.V. apparatus and antenna as also to VCR against Fire and allied perils, Riot and Strike, any other accidental damage by external means, mechanical and electrical breakdown, burglary, housebreaking and theft. Cover is also provided against third party liability of the insured or loss to his own surrounding property arising out accidents caused by or through the insured item. Differential rates of premium are applied by the insurer depending upon whether the equipment is for personal or commercial use and also if let on hire.

Ultimate Net Loss
The term used in excess of loss reinsurance for the total sum paid by the ceding company in settlement of its liabilities, other expenses excluding office expenses and salaries, less salvage/recoveries and all other reinsurance recoveries.

Ultimate Net Loss Clause
A Clause appearing in the excess of loss reinsurance wordings to the effect that the total sum actually paid by the Reinsured in settlement of losses including loss expenses, loss salvages and recoveries including recoveries from treaties shall insure to the benefit of the excess of loss cover.

Ultra Vires
Beyond power or authority

unfair or misleading advertisement
“will mean and include any advertisement:

(i) that fails to clearly identify the product as insurance;

(ii) makes claims beyond the ability of the policy to deliver or beyond the reasonable expectation of performance;

(iii) describes benefits that do not match the policy provisions;

(iv) uses words or phrases in a way which hides or minimizes the costs of the hazard insured against or the risks inherent in the policy;

(v) omits to disclose or discloses insufficiently, important exclusions, limitations and conditions of the contract;

(vi) gives information in a misleading way;

(vii) illustrates future benefits on assumptions which are not realistic nor realizable in the light of the insurer’s current performance;

(viii) where the benefits are not guaranteed, does not explicitly say so as prominently as the benefits are stated or says so in a manner or form that it could remain unnoticed;

(ix) implies a group or other relationship like sponsorship, affiliation or approval, that does not exist;

(x) makes unfair or incomplete comparisons with products which are not comparable or disparages competitors.

Umbrella XL
A company may have excess of loss programme for different classes. At the top of each such programme they may have arranged an Umbrella XL. This Umbrella will be for all classes. It is with variable underlying for each class equal to the range of top layer in individual class’s XL programme. It works as top layer for each class and when more than one class are involved underlying of each class applies separately with a common/combined limit.

Unallocated Benefit
A policy provision providing reimbursement up to a maximum amount for the cost of all extra miscellaneous hospital services, but not specifying how much will be paid for each type of service.

Inadequate insurance coverage in respect of the insured property. This results in the claim admitted under the policy being proportionately reduced.

Underlying limit
A term used in connection with Excess of Loss treaty. The limit upto which the ceding company would bear the loss due to any one cause or event before invoking the recovery from reinsurer.

An insurer; an official in an insurance company whose main responsibility is to perform the functions of underwriting to determine whether the risk proposed for insurance is insurable and if so, at what rates, terms and conditions.

Process of examining proposal, arranging for inspection of risks, fixing of premium rates, terms and conditions of cover, rejection of uninsurable risks etc. with the main objective of ensuring spread of risks among a large group of insureds in a manner that is equitable for the insuring community and profitable for the insurer.

Underwriting Loss
Shortfall that results after payment of claims and expenses against the premium received.


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.

The worth of the property to be insured or of that which has been lost or damaged.

Valued policy
Contracts of Insurance where the sum insured in respect of the insured property is deemed to be the actual value of the property throughout the currency of insurance. Claims in respect of total loss are settled without any adjustment which may otherwise arise on such considerations as adequacy of the sum insured, market value, etc.
Marine Insurance Policies both for Cargo and Hull are all “Valued Policies”. As regards policies like Fire and Burglary Policies this facility is extended in respect of valuables, paintings, pictures, curios, antiques and other works of art.

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.

Variable Quota Share Treaty
In a Quota Share Treaty there may be retention with maximum say 20%. This would mean that on certain risks retention can be lower than this percentage. This is termed as variable quota share. There will be corresponding variation with regard to maximum reinsurance in respect those risks.

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. The insured consequently will get either of the following benefits
1. A portion of the premium already collected by the insurer will be given to the credit of the insured at the time of renewal of the policy or
2. The existing policy will be extended by a period equivalent to the laid up period by charging an extra premium which will represent the premium for the restricted cover during the laid up period.

Vehicles subject to Hypothecation Agreement
It is not permissible to issue policies in the joint names of Pledge and Registered Owner of the vehicle. Policies must be issued in the name of Registered Owner of the vehicle and the Pledges interest protected by the use appropriate Endorsement.

Vehicles subject to Lease Agreement
It is not permissible to issue policies in the joint names of Lessee and Lessor. Policies must be issued in the name of Lessee and the Lessors interest protected by the use of 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.

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 mentioned as ‘waiting period’ in the policy during which any loss-taking place is not recoverable under the policy.

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 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

Warehouse to Warehouse Cover
The voyage through which the cargo is to be moved commences from the sellers warehouse and terminates on arrival at buyers warehouse. Since the cover for cargo encompasses this entire movement from the sellers warehouse to the buyers warehouse, it is called as warehouse to warehouse cover. This means that the scope of the cargo cover is extended to take care of the interior transits at both ends of ocean transit as well. (See also “Transit Clause”)

Individuals or organizations who receive the goods for the purpose of storage in their warehouses. They are supposed to exercise due care and diligence in the storage of goods. They are entitled to payment for their services. They have a lien on the goods for the charges payable to them and consequently have an insurable interest in the goods.

Warranted underdeck
Incorporation in the marine cargo insuraance policy, of a promise or undertaking given by the insured to the effect that the insured cargo shall be carried under deck only. Breach of this warranty will enable the insurer to avoid the contract.

An undertaking by the insured that:

(a) Something shall be done

(b) Something shall not be done

(c) A certain state of fact exists

(d) A certain state of fact does not exist

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. The warranty surveyor also approves the condition of the vessel to be towed and the vessel being used for towing depending upon the voyage, distance and capability.

Year of Account basis
This term relates to an accounting methodology practiced in connection with reinsurance transactions. In this category are accounts that deal with premiums and losses in the year under review irrespective of the year of origin of the cession or of the loss.

This refers to the ratio that income from an investment bears to the cost/face value of the investment. In the case of a 14% Debenture of face value of Rs.100/-, the income will be Rs.14 per annum on the investment of Rs.100 and hence the yield is 14% if the debenture is acquired at Rs.100. In case the same is acquired at a price of Rs.110, the income in a year will be Rs.14 on an investment of Rs.110 and hence the yield will be 14/110×100. This is called current yield of the investment.

York-Antwerp Rules
The set of rules, which has been devised as a voluntary code to maintain universal uniformity on treatment of General Average. The provisions of these rules form the basis for General Average adjustments. There is specific incorporation in all the bills of Ladings agreeing for adoption of these rules. Underwriters, world over approve these rules in connection with consideration of General Average related claims under their polices. These rules were first coded in 1890 and have undergone few amendments over the period to take care of developments that have taken place in the implementation of these rules.

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