Insurance Terms

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

ABANDONMENT
A condition precedent to a constructive total loss in marine insurance. The Insurer usually rejects the ‘notice of abandonment’ and agrees to place the Insured in a position as though a writ had been issued against the Insurer.

ACCEPTANCE
The Insurer signifies acceptance of a risk by signing the Broker’s Slip at which stage the contract is concluded between the Insurer and the Insured.

ACCIDENT
An unexpected event which happens by chance and is not expected in the normal course of events.

ACCIDENTAL BODILY INJURY – Physical Injury to a person, accidentally sustained directly and independently of all other causes.

A.C.I.I.
Associate of the Chartered Insurance Institute. A professional qualification awarded by the Chartered Insurance Institute to successful examinees.

ACT OF GOD
Events caused by forces of nature, without human intervention, and not preventable by reasonable precautions. Examples: flood, earthquake.

ACTUAL CASH VALUE
The current cost of replacing an article with a similar one in the same condition. Any item has three basic values: original cost, actual cash value, and replacement value. For example, if you originally paid $400 for your living room couch; its actual cash value might be $175. But if it’s destroyed in a fire, replacing it will cost you $800.

ACTUAL TOTAL LOSS
An actual total loss can occur in four ways: (1) Where the subject matter Insured is completely destroyed. (2) Where the subject matter Insured ceases to be a thing of the kind Insured (This is termed ‘loss of specie’). (3) Where the assured is irretrievably deprived of the subject matter Insured, although it has retained its specie and (4) In marine insurance, where a missing ship is deemed an actual loss when it has been posted as “missing” at Lloyd’s.

ACQUISITION COSTS
The costs incurred by an Insurer in obtaining business. These may include commissions paid to agents and brokers, taxes, etc.

ADDITIONAL INSURED
Another person or Company who has an insurable interest and has been named as an Additional Interest Insured under the policy.

ADDITIONAL PREMIUM
An extra charge for an alteration, during the policy period, which increases the hazard or the Company’s liability.

ADJUSTER
An independent person of competent skill and experience, appointed by the Insurer following a loss, who investigates and reports on the cause and quantum of the loss.

ADJUSTABLE PREMIUM
Where a basic or deposit premium is paid at inception, the premium is adjustable at the expiry of the policy on the basis set out in the policy document.

AGENT – One who acts on behalf of another. One whose actions can “bind” his principal. Specifically, a representative of an Insurance Company with authority to solicit coverage contracts.

ALL RISK
Coverage against loss or damage from all perils except those specifically excluded.

AMOUNT OF RISK
The Insurance Company’s total liability at a specific location

ANNUAL AGGREGATE DEDUCTIBLE (AAD)
This does not replace the normal policy claim deductible and is supplementary thereto. When a loss occurs, the normal policy deductible is applied. If a balance remains after applying the policy deductible, this net amount is applied to the AAD. If it is less than the AAD no payment is made to the Insured and the item is held in suspense until the next claim arises, if any. This procedure continues until the aggregate of the items held in suspense reach the AAD. Thereafter, the policy reverts to a contract without an AAD; subsequent claims being subject only to the normal policy deductible and being settled for the amount by which they exceed the policy deductible.

APPLICATION (APP)
A form on which the prospective Insured states facts requested by the Insurance Company and on the basis of which (together with any information from other sources) the Insurance Company decides whether or not to accept the risk, modify the coverage offered, or decline the risk.

APPRAISAL
A valuation of property made for determining its insurable value or the amount of loss sustained.

APPURTENANT STRUCTURES– Buildings or structures other than the Insured’s residential dwelling. (i.e., garage, shed, barn, etc.)

ARSON The willful and malicious burning of property.

ASSIGNMENT

Transfer of a right.
The document making the transfer of a right. The right transferred may be an interest in the subject-matter of insurance, in the contract of insurance, or in policy moneys due to the insured.

ASSUMED LIABILITY
Liability which would not rest upon a person except that he has accepted responsibility by contract expressed or implied. This is also known as contractual liability.

ASSURANCE
Same as “insurance”.

ASSURED
Same as “Insured”.

ASSURER
Same as “Insurer” (Insurance Company).

AUTHORISATION
The power or right to act on behalf of another.

AUTOMOBILE INSURANCE
Coverage on the risks associated with driving or owning an automobile. It can include collision, liability, comprehensive, medical, and uninsured motorist coverages.
Aviation insurance- is insurance coverage geared specifically to the operation of aircraft and the risks involved in aviation. Aviation insurance policies are distinctly different from those for other areas of transportation and tend to incorporate aviation terminology, as well as terminology, limits and clauses specific to aviation insurance.

AVERAGE

The arithmetic mean.
In marine insurance, loss or damage.
In non-marine property insurance, where average is said to apply and there has been under-insurance, the insured’s claim is reduced in proportion to the under-insurance.

AVERAGE BOND
In maritime law, on the occurrence of a general average act the carrier has a lien on the cargo. To secure release of cargo, the cargo owner has to pay a deposit (usually a percentage of the value of his cargo) or alternatively produces an Insurer’s Guarantee of the eventual calculated contribution amount due by the cargo owner. At the time of payment of the deposit or production of the guarantee the consignee or cargo owner will be required to sign an Average Bond or “General Average Agreement” by which he agrees to the procedure for calculation of the general average adjustment and to pay his rateable proportion thereof. It is customary to for the average bond or agreement to be countersigned by a guarantor or the consignee’s or cargo owner’s bankers.

AVOIDANCE OF RISK
Taking steps to remove a hazard, engage in an alternative activity, or otherwise end a specific exposure.

BASIC RATE
The standard charge for a given type of risk.

BASIS OF VALUATION
In marine insurance, a clause inserted in an open cover policy defining the basis of an acceptable Insured value in respect of shipments that are declared ‘late’. The basis normally includes the invoice cost of the goods plus insurance charges, freight and a fixed percentage representing the profit to the seller.

BI/PD
Bodily Injury / Property Damage Liability Coverage.

BILL OF LADING
A shipping document prepared by the shipping agent and containing a complete description of the goods to be shipped. It acts as the carrier’s receipt to the shipper for his goods.

BILL OF SIGHT
When goods arrive at Customs without documents or available knowledge of full details, the Customs Authorities require that the importer completes a bill of sight before he can obtain release of his goods.

BINDER
An agreement between an Insurer and another, termed a ‘Coverholder’, whereby the Coverholder is authorized to accept proposals for insurance contracts from third parties and to bind the Insurer to such contracts.

B/L
Bill of Lading.

BLDG.
Building.

BLOW OUT
Peril encountered in offshore oil-drilling rig insurance. Occurs when pressure below the seabed exceeds the drilling column pressure and literally blows out the column.

BOAT
A small craft or pleasure vessel.

BODILY INJURY
Term used in Auto and Casualty policies meaning physical injury, including sickness, disease, mental injury, shock or death.

BODILY INJURY LIABILITY
Pays when an Insured person is legally liable for bodily injury or death caused by your vehicle or your operation of most non-owned vehicles. This coverage also pays for your legal defence if you are sued.

Boiler Insurance (Boiler Cover) – All risks of physical loss of and or damage to boilers and pressure vessels of every type and description the property of the insured held by them in trust on commission and or for which they are responsible including the risks of physical loss of and or damage to the assured’s surrounding property and third party property as well as death of and or bodily injury and or illness to third parties.

BOILER INSURANCE– All risks of physical loss of and or damage to boilers and pressure vessels of every type and description the property of the insured held by them in trust on commission and or for which they are responsible including the risks of physical loss of and or damage to the Assured’s surrounding property and third party property as well as death of and or bodily injury and or illness to third parties.

BREACH OF CONTRACT
Where one of two parties to a contract breaks one of the conditions of the contract whereby the aggrieved party suffers a wrong or injury, the aggrieved party has the right to sue for damages for breach of contract.

BREACH OF WARRANTY
Whether or not it affects a claim on the policy the Insured must comply with all warranties in the policy. In the event of breach of warranty by the Insured the Insurer is, automatically, discharged from all liability from the date of the breach; but the Insurer remains liable for Insured losses occurring prior to that date.

BROAD FORM
Any of the commercial or personal lines property forms which provide coverage on a named perils basis. This form normally adds the Extended Coverage and Vandalism and Malicious Mischief coverages.

BROKER
An independent person or firm who acts on behalf of the Insured in placing business with the Insurance Company. Responsible for the collection of premiums but having no authority to give coverage on the Insurance Company’s behalf without their specific agreement. Compensation is on a commission basis.

BROKER’S SLIP
The slip of paper used by an insurance Broker for concluding the contract (i.e. placing the risk) and/or for subsequent administrative procedures. It is signed by the Insurer who ‘underwrites’ his name (i.e. signs the slip) indicating the proportion of the risk (usually expressed as a percentage) that he has accepted.

BULLION
Gold or silver valued by its weight, ignoring its coin value.

BUILDER’S RISK – Insurance against loss to buildings or specified structures during the course of their
construction. Coverage may or may not include the material Involved in their construction.

BUREAU VERITAS
A French Classification Society for vessels.

BURGLARY
Unlawful removal of property from premises involving visible forcible entry.

BUSINESS INTERRUPTION
Insurance against business expenses and loss of income resulting from fire or other Insured peril.

BUYER’S INTEREST
The insurable interest of the buyer of insurable property

CANCELLATION
Termination of an insurance coverage during the policy period by the voluntary act of the Insurance Company or Insured, effected in accordance with provisions in the contract or by mutual agreement.

C&D
Transport abbreviation meaning “Collection and delivery”

C&F
Cost and freight. Sale term relating to goods in transit. This is the same as C.I.F. except that the seller does not arrange insurance for the buyer.

C&I
Cost and Insurance. Sale term relating to goods in transit. The seller does not pay the shipping charges, leaving the buyer to make his own arrangements. The seller does arrange the insurance and includes the insurance premium in the purchase price.

CARGO CLAUSES
Clauses used in policies insuring goods in transit
most commonly used set are issued by the Institute of London Underwriters.

CARRIER
Shipowner, Vehicle-Owner or other person who carries goods and is responsible for their safety.

CASH IN TRANSIT
The insurance of cash and/or bank notes in transit.

CASH VALUE (ACTUAL) – The cost of replacing or restoring property to it condition prior to a loss minus the depreciation.

CATASTROPHE
A sudden, great disaster.

CAUSA CAUSANS
The cause of a cause. A legal doctrine used in determining “proximate cause”.

CAUSA PROXIMA
Proximate Cause. The full term is “Causa Proxima non Remota Spectatur”

CAUSA REMOTA
The cause, in a series of causes resulting in a loss, which is furthest removed from the proximate cause. It is often the first cause of the series.

CAVEAT EMPTOR
“Let the buyer beware”. A legal tem relating to the purchase of goods and placing the onus on the buyer to satisfy himself that the goods which he is purchasing are suitable and of sufficient standard or quality for the purpose intended.

CERTIFICATE OF INSURANCE
A document issued to the Insured certifying that insurance has been effected and that a policy has been issued.

CHARTERER
A hirer of a vessel from the owner either for a period of time or for a voyage.

CHARTER HIRE
The hiring out of a ship on charter, either voyage or time.

CHARTERPARTY – Conditions under which a charterer hires a vessel.

CIVIL LIABILITY
Liability to other motorists, pedestrians and property owners that you assume when operating your automobile on a public roadway.

CIVIL COMMOTION
An internal national disorder.

CLAIM
Notice to an Insurer that under the terms of a policy, a loss may be covered.

CLAIMANT
The person suffering the loss who presents the claim.

CLAIMS ADJUSTER
An independent person hired by an Insurance Company to be responsible on behalf of the Company for claims settlement.

CLAIMS DOCUMENTS
The documents required for presentation to the Insurer when the Insured wishes to make a claim under his policy.

CLAIMS RESERVE
The amount set by the Insurer is his book of accounts for the settlement of outstanding claims.

CLASSIFICATION CLAUSE
In marine insurance, a clause detailing the minimum standards of vessels that carry cargo failing which an additional premium is payable.

CLAUSE
A term used to identify a particular part of a policy or endorsement.

CO-INSURANCE
(1) In property insurance, a clause under which the Insured shares in losses to the extent that he is underinsured at the time of loss; (2) Where two or more Insurers each have part of the risk under a single insurance policy.

COLLISION
The impact between a vehicle/vessel and another vehicle/vessel or object.

COMMISSION
Remuneration for service rendered.

COMMON CARRIER
A carrier who agrees to carry any goods. A carrier who refuses to carry certain types of goods, mainly for safety reasons, is not a common carrier.

COMPREHENSIVE INSURANCE
Comprehensive insurance reimburses you for damage to your car and also covers your legal liability to third parties for property damage and bodily injury.

COMPULSORY INSURANCE
Any form of insurance which is required by law.

COMMERCIAL LIABILITY– Liability insurance is when you cover any visible or possible liability that you may have with proper insurance. Commercial Liability is when businesses or commercial establishments purchase insurance to cover their liabilities

CONDITION
A requirement imposed in the contract of insurance by the Insurer and which must be literally complied with unless it is waived by the Insurer.

CONSEQUENTIAL DAMAGE/LOSS
A loss which is an indirect result of an accident or fire, e.g. food spoiled through breakdown of a refrigerator.

CONSIDERATION
The insurance premium paid to bind the Insurer to the performance of the contract.

CONSORTIUM
A group of Insurance Companies who agree to share with each other risks written by any individual member of the Consortium.

CONSTRUCTIVE TOTAL LOSS
In marine insurance, the Insured has the right to abandon the Insured property to the Insurer and claim a constructive total loss where, because of the operation of an Insured peril, (a) the Insured is deprived of the Insured property and is unlikely to recover it, or (b) an actual total loss appears to be inevitable, or (c) in the case of a vessel – the estimated costs of recovery and repair would exceed the repaired value, or (d) in the case of cargo – the estimated costs or recovery, reconditioning and forwarding to destination would exceed the repaired value (see ‘Notice of Abandonment’).

CONTAINER
A large metal box in which many packages can be stowed in advance of loading on a ship so that the container can be loaded, stowed and discharged as a complete unit.

CONTRACTUAL LIABILITY – Liability which would not rest upon a person except that he has accepted responsibility by contract expressed or implied.

CONTRACTORS ALL RISK – Policy that covers all risks associated normally with a construction project. Issued commonly under the joint names of a contractor and a principal (client), it usually also includes public liability insurance.

CONTRIBUTION
Where two or more polices exist covering the same interest, there is double insurance. Each Insurer will contribute rateably towards the loss in proportion to the amount for which he is liable under his policy.

COVER
To insure.

COVERAGE
Insurance.

CROSS LIABILITY
In a policy have multiple named Insureds, coverage for the legal liability of each party to the other.

CUTTING CLAUSE
A cargo clause in respect of pipes or similar cargoes of length which provides that damaged cargo should be cut off leaving the good pieces for the account of the Insured.

CUT THROUGH CLAUSE
The original Insured has no legal rights under the contract between the Insurer and his Reinsurer. The Cut Through Clause is a condition which guarantees payment to the original Insured even though he is not a party to the reinsurance contract between the Insurer and the Reinsurer.

DAYS OF GRACE
A number of days, usually 15, may be allowed after the expiry date of the insurance during which the renewal premium may be paid and renewal effected.

DECLARATIONS (DEC SHEET)
A term used in insurance for the portion of the contract which contains information such as the name and address of the Insured, the property Insured, its location and description, the policy period, the amount of insurance coverage, applicable premiums, and supplemental representations by the Insured. · the types of coverage you have elected;

the limit for each coverage;
the cost for each coverage;
the specified vehicles covered by the policy;
the types of coverage for each vehicle covered by the policy; and
other information applicable to the policy.

DEDUCTIBLE
The portion of a loss that you are required to pay before your insurance coverage will respond.
Also known as a SIR
Self-Insured Retention. Deductibles can be used to reduce your physical damage premiums. For example, if you owned a policy with a $200 deductible and you suffered a covered loss totaling $1,000, you would pay the first $200 and the Insurance Company would pay the remaining $800. If the loss were only $200, you would pay the entire amount and the Insurance Company would pay nothing.

DEFERRED ACCOUNT
An agreement whereby the Insured is allowed to pay premium by instalments.

DEMURRAGE
Money paid to a shipowner in compensation for delay of a vessel beyond the period allowed in a charterparty when loading or discharging. In marine insurance the term is used to denote any loss of hire period incurred by the shipowner.

DEPRECIATION
Decrease in the value of property over a period of time due to use, wear, tear, and obsolescence. For example, if you paid $500 for a television set five years ago, its current value minus depreciation might be only $125.

DEPOSIT PREMIUM
A premium paid in advance as a deposit when it is not practicable at the time of placing the risk to assess the final premium. It is usual for a provision to be made at the time of placing to allow for adjustment on expiry of the policy. In some cases the deposit is specified as a minimum premium, in which case the adjustment is made only if the final premium exceeds the deposit premium.

DEVIATION
In marine insurance deviation relates to the departure of a ship from its intended course with the intention of returning to that course and completing the planned voyage.
DIC/DIL
Abbreviated term for Difference in Conditions / Difference in Limits. It is typically found on Umbrella or Excess Liability policies to provide expanded coverage for risks/perils that are not covered by the primary or underlying policy.

DIRECTORS AND OFFICERS LIABILITY INSURANCE – (often called D&O) is liability insurance payable to the directors and officers of a company, or to the organization(s) itself, to cover damages or defence costs in the event they suffer such losses as a result of a lawsuit for alleged wrongful acts while acting in their capacity as directors and officers for the organization. Such coverage can extend to defence costs arising out of criminal and regulatory investigations/trials as well; in fact, often civil and criminal actions are brought against directors/officers simultaneously.

DIRECT LOSS (OR DAMAGE)
A loss which is a direct consequence of a particular peril. Fire damage to a refrigerator would be a direct loss. Spoiling of food in the refrigerator as a result of the fire damage would be an indirect loss.

DIRECT WRITER
An Insurance Company which sells its policies through salaried employees (licensed agents) who represent it exclusively, rather than through independent local agents, who represent several insurance companies.

DISABILITY– An injury or impairment of faculty which prevents the injured person from performing certain functions of his/her occupation.

DISBURSMENTS
Payments made “out of pocket” by the master or shipowner in connection with running the vessel.

DISCLOSURE
The insured must disclose every material fact or circumstance to the insurer before the contract is concluded, that is before the insurer accepts the risk.

DOUBLE INSURANCE
Double insurance occurs when two or more policies are effected on the same interest and adventure so that the total sum insured exceeds the value at risk. The insured may claim on either policy but he cannot claim more than the properly allowable insurable amount.

DUE DILIGENCE
The duty of a shipowner or cargo owner to take all reasonable and proper steps or measures to ensure the safety of hi own property and/or the property in his care and also to avoid damage to the property of others.

DUTY OF DISCLOSURE – A common law duty on the part of a proposer for insurance to disclose to the insurer all material facts, viz., all facts that would influence a prudent insurer in deciding whether to grant the insurance and, if so, on what terms.

EARTHQUAKE INSURANCE
Insurance covering damage caused by an earthquake as defined in the contract.

E.E.O. –Each and every occurrence

EFFECTIVE DATE
The date on which an insurance policy or bond goes into effect, and from which protection is furnished.

E.L.
Employer’s Liability

EMBEZZLEMENT
The fraudulent use of money or property which has been entrusted to one’s care.

E.M.L.
Estimated Maximum Loss

EMPLOYEE BENEFITS INSURANCE – In general, indirect and non-cash compensation paid to an employee. Some benefits are mandated by law (such as social security, unemployment compensation, and workers compensation), others vary from firm to firm or industry to industry (such as health insurance, life insurance, medical plan, paid vacation, pension, gratuity).

EMPLOYERS LIABILITY INSURANCE
Coverage against common law liability of an employer for accidents to employees and liability imposed by Workmen’s’ Compensation Law.

ENDORSEMENT
Amendment to the policy used to add or delete coverage. Also referred to as a “rider.”

ERRORS AND OMISSIONS – Failure to perform contractually or otherwise, because of doing work improperly, or failing to perform certain prescribed functions.

ESCALATOR CLAUSE
A clause in a property policy which provides for fixed monthly percentage increases in the sum insured to cater for inflation, etc.

ESTIMATED COST OF REPAIRS
In motor insurance, the total cost of repairs to make good the damage to the vehicle

EXCESS
A claim deductible. An amount or percentage specified in the policy which must be exceeded before claims are payable.

EXCESS INSURANCE – When two or more policies provide coverage, the excess policy would pay any thing after or above that which would be paid by the primary policy or primary insurance.

EXCLUDED LOSSES
Losses that are specifically excluded from the policy cover.

EXCLUSIONS
Certain causes and conditions, listed in the policy, which are not covered.

EXEMPLARY DAMAGES
Damages awarded by a Court, in an action for liability, to set an example; rather in the form of a punishment against the defendant than to make good a loss suffered by the plaintiff.

EX GRATIA PAYMENT
A payment made by the Insurer in respect of a claim for which he is not legally liable. Done as a sign of goodwill or to accommodate a valued Insured.

EXPERIENCE
The past claims experience of the Insured.

EXPIRATION
The date upon which a policy will end.

EXPOSURE
Degree of hazard threatening a risk because of external or internal physical conditions.

EXPRESS AUTHORITY
Authority given in writing.

EXPRESS WARRANTY
Specified in the policy document. It is a promise by the Insured that a thing shall or shall not be done or that a state of affairs will or will not exist.

EXTRAORDINARY SACRIFICE
In marine insurance, a term used in determining General Average. It is expenditure or sacrifice other than obligations under the contract of affreightment, incurred by the Shipowner.

EX WAREHOUSE
A term used in the sale of goods where the buyer’s responsibility for the goods attaches from the time they leave the seller’s warehouse.

F.A.C.
A shipping term meaning “as fast as can”; that the vessel must be loaded or unloaded as fast as possible.

FACE AMOUNT
An American expression denoting the amount for which the Insurer is liable under the policy.

FACULTATIVE
A term meaning the “right of option” of an underwriter to decide (in insurance or reinsurance) whether or not to accept a risk.

FAILURE OF CONSIDERATION
Occurs when the subject matter insured or part thereof is not exposed to risk. For example, a policy is effected to cover a marine shipment of 100 boxes but only 80 boxes are sent. The Insured is entitled to a refund of premium on the 20 boxes that were not exposed to risk.

FAIR MARKET VALUE
The price that a willing buyer would pay a willing seller, neither being under any compulsion to sell or buy.

F.A.S.
A term of sale meaning “free alongside ship”. The seller is responsible for the goods and all charges until the goods are delivered alongside the overseas vessel to await loading.

FAULTY DESIGN
An extension of cover available under contractors all risks policies. Whilst the extension provides cover for loss or damage arising from faulty design, it does not cover the expense of repairing, modifying, replacing or renewing the part with the faulty design, nor any cost or expense incurred by betterment or alteration in design.

FEAR OF A PERIL
Insurers are liable for losses proximately caused by an insured peril. Fear of a peril does not constitute a peril so that Insurers are not liable for a loss caused by an uninsured peril, even though the loss would not have arisen but for fear of an insured peril.

FINANCIAL DEFAULT OF CARRIER
An exclusion clause in marine cargo insurance which relieves the insurer from liability where loss, damage or expense arises from insolvency or financial default of the owners, managers, charterers or operators of the vessel carrying the insured goods.

FIRE
Combustion sufficient to produce a spark, flame, or glow and which is hostile (as opposed to friendly
i.e., not in the place where it is intended to be, such as in a furnace.)

FIRE INSURANCE
Coverage for loss of or damage to a building and/or contents due to fire.

FIRE RESISTIVE CONSTRUCTION
A building which has exterior walls, floors, and roof constructed of masonry or other fire-resistive materials.

FIRE WASTE
The absolute economic loss of wealth to the community caused by fire.

FLAG OF CONVENIENCE
Where a ship registers with a flag of a country not requiring high standards of compliance to safety, inspections, surveys, etc. it is said to be registered with a ‘flag of convenience’.

FLASH POINT
The temperature at which a substance or the vapour therefrom will ignite. The lower the flash point the higher the fire risk.

FLAT CANCELLATION
Cancellation of an insurance outright from inception.

FLOATER POLICY
A policy under the terms of which protection follows moveable property, covering it wherever it may be.

FLOOD INSURANCE
A form of insurance designed to reimburse property owners from loss due to the defined peril of flood. Usually sold in connection with a government Flood Insurance plan.

FLOTSAM
Goods lost from a vessel which remains afloat.

F.O.B.
A term of sale meaning “free on board; the seller’s responsibility for the goods ceases as the goods are loaded onto the overseas vessel for carriage overseas.

FORCE MAJEURE
An act of God. Any occurrence completely beyond human control and which could not have been avoided by foresight. A superior power. Circumstances beyond one’s control. Example: an earthquake.

FORGERY
In general, any false writing with intent to defraud.

FORKLIFT
A motorised vehicle with forklike lifting apparatus, used for cargo handling.

FORM
An insurance policy itself or riders and endorsements attached to it.

FORM OF SUBROGATION
An authority signed by the Insured which enables the Insurer to pursue his subrogation rights without the necessity of proving his entitlement to the rights.

FORTUITOUS EVENT
An unforeseen accident; any loss or damage which is not an inevitability.

FORUM CONVENIENS
The country in which circumstances demand that a legal action should be founded.

FOUL BILL OF LADING
A bill of lading which has been qualified by the carrier to show that the goods were not sound when loaded. Usually termed a “dirty” bill of lading.

F.P.A.
“Free of particular average”. A term in marine insurance referring to a policy which does not cover particular average (i.e. partial) losses.

FRANCHISE
In marine insurance, an amount or percentage specified in the policy that must be reached before a claim is payable. Once the amount or percentage is attained the claim is payable in full.

FRAUD
Fraud by the Insured negates a contract of insurance and the Insurer is not liable to return any premium paid.

FREIGHT FORWARDER
One who represents an exporter in arranging overseas shipments.

FRONTING COMPANY
An Insurer who acts for other (re)insurers by issuing a policy in its own name thereby holding itself directly liable for claims to the insured, although the liability of the Company is reinsured 100% with other insurers.

FROZEN FOOD CLAUSES
A specialist form of clauses used in marine insurance to provide cover on shipments of all forms of frozen food, except frozen meat which has its own form of specific clauses.

FROZEN MEAT CLAUSES
Utilised in marine insurance for coverage on shipments of frozen meat. The clauses are not designed for the insurance of chilled, cooled or fresh meat, nor any frozen products other than meat.

GENERAL AVERAGE
A maritime legal principle, separate and apart from marine insurance, whereby all parties to an adventure, who benefit from a sacrifice or expenditure incurred in preserving an emperilled adventure, must each contribute rateably to make good the amount sacrificed or the expenditure incurred.

GENERAL AVERAGE ADJUSTMENT
The adjustment drawn up by the appointed Average Adjuster indicating the proportions of the interested parties. It is a complex process and may take several years to prepare.

GENERAL AVEARGE DEPOSIT RECEIPT
A receipt issued by a shipowner to the payer of a general average deposit, giving details of the interest and contribution due.

GENERAL AVERAGE EXPENDITURE
Expenditure incurred by the shipowner in connection with a general average act such as the hiring of tugs to free a stranded vessel or to tow it into port.

GENERAL AVERAGE GUARNTEE
A guarantee to the shipowner in writing from an insurer, bank or other party, to pay the amount of the adjusted contribution of the cargo owner.

GENERAL AVERAGE SACRIFICE
The sacrifice of property exposed to risk in a maritime adventure, in time of peril, for the purpose of preserving the remainder of the interests from a total loss.

GERMANISCHER LLOYD
A German vessel classification Society.

GRACE PERIOD
A period after the premium due date, during which an overdue premium may be paid without penalty. The policy remains in force throughout this period.

GROSS REGISTERD TONNAGE
The tonnage of a ship as registered before deduction of light and air spaces, machinery and navigating spaces and other parts of the vessel to arrive at the net registered tonnage.

HAGUE RULES
A set of rules agreed following an International Maritime Conference in Brussels in 1922. The rules establish the rights and immunities of carriers in respect of the carriage of goods by sea.

HARDENING MARKET
When an insurance market develops a more selective attitude towards insurance contracts offered to it, it is said to be a “hardening” market.

HAZARD
A specific situation that increases the probability of the occurrence of loss arising from a peril, or that may influence the extent of the loss. For example, accident, sickness, fire, flood, liability, burglary, and explosion are perils. Slippery floors, unsanitary conditions, shingled roofs, congested traffic, unguarded premises, and uninspected boilers are also hazards.

HEATING
An increase in temperature which causes damage to marine cargo.

HELD COVERED
(i) An agreement in advance by an Insurer, to continue insurance in the event of a certain defined circumstance arising; or (ii) An insurer may agree to “hold covered” a new risk or a renewal pending receipt of special requested information or full information.

HOMEOWNER INSURANCE – A multiple peril contract for owners or occupants of dwellings generally including fire, theft and liability coverage. A homeowners policy is a package policy combining many additional coverages not included in basic fire policies.

HOUSEKEEPING
The general care, cleanliness and maintenance of an Insured property.

HULL INSURANCE
Insurance on the ship, its machinery and equipment.

IMPLIED WARRANTY
A warranty that is not expressed in the policy specifically but which is understood by both parties to be incorporated in the insurance contract.

IMPROVEMENTS AND BETTERMENTS
Additions or changes made by a lessee at his own cost to a building which he is occupying which enhance its value. These become part of the realty and require special insurance consideration.

INADEQUATE PACKING
Packing that is not adequate to withstand the normal hazards to be encountered by cargo in a marine transit.

IN AND/OR OVER
An abbreviation referring to goods being carried on deck or underdeck.

INDEMNIFY
To restore the victim of a loss, in whole or in part, by payment, repair, or replacement.

INDICATE
To indicate a rate, an insurance broker advises his Client that he has obtained a “lead” who is willing to accept a line on the insurance at the rate indicated by him.

INDICATION
The rate which an insurance broker indicates.

INDIRECT LOSS (OR DAMAGE)
Loss resulting from a peril, but not caused directly and immediately thereby. For example: Loss of property due to fire is a direct loss, while the loss of rental income as the result of the fire would be an indirect loss.

IN-FORCE
Insurance on which the premiums are being paid or have been fully paid. In life insurance, usually refers to insurance by face amount. In health, usually refers to premium volume being paid to Insurance Company or insurance companies in aggregate.

INHERENT VICE
A quality in the nature of goods which results in inevitable loss of or damage to the goods in certain circumstances.

INITIALLING
An Insurer initials the broker’s slip when he accepts a line, his initial being conclusive of his acceptance of the risk.

INITIAL PREMIUM
A deposit premium. A premium paid at inception of the insurance with intention of adjustment to correct the premium later.

INLAND MARINE INSURANCE
A branch of the insurance business which developed from the insuring of shipments which did not involve ocean voyages. Also known as ‘Goods in Transit’ insurance.

IN PERSONAM
A legal term referring to legal action against an individual.

IN REM
A legal term referring to an action against an object or thing.

INSPECTION
Independent checking on facts about an applicant or claimant, usually by a commercial inspection agency.

INSTITUTE CARGO CLAUSES ‘A’
In marine insurance, a set of clauses utilized to provide ‘all risks’ cover on shipments of cargo by sea. Commonly referred to as the ICC ‘A’.

INSTITUTE CARGO CLAUSES ‘B’
This set of Clauses provides the same form of cover as the ICC ‘A’ except that ‘all risks’ cover is replaced with cover against specified perils only.

INSTITUTE CARGO CLAUSES ‘C’
Cover under these clauses are on a named perils basis as in the ICC ‘B’ but the list of named [perils is less extensive.

INSTITUTE CARGO CLAUSES ‘AIR’
In marine insurance, a set of clauses utilized to provide ‘all risks’ cover on shipments of cargo by air. Commonly referred to as the ICC ‘AIR’.

INSTITUTE OF LONDON UNDERWRITERS
An association of Company Underwriters in London representing the Companies, which are members of the Institute. Its purpose is to further the interests of insurance by co-ordinating facilities regarding wordings, clauses and conditions.

INSTITUTE STRIKES CLAUSES (CARGO)
In marine insurance, a set of clauses that provide cover for the perils of strikes, civil disturbances etc. that are excluded by the standard Institute Cargo Clauses (A), (B) and (C).

INSTITUTE WAR CLAUSES (CARGO)
In marine insurance, a set of clauses that provide cover for the peril of war that is excluded by the standard Institute Cargo Clauses (A), (B) and (C).

INSUFFICIENCY OF PACKING
The standard Institute Cargo Clauses incorporate a clause which excludes any loss caused by insufficiency of packing or preparation of insured goods for transit.

INSURABLE INTEREST
This term means that the proposer must stand to lose something if the property at risk is lost or damaged or stands to gain by its continued existence or safety.

INSURABILITY
Acceptability of an applicant for insurance to the Insurance Company.

INSURANCE
A formal social device for reducing risk by transferring the risks of several individual entities to an Insurer. The Insurer agrees, for a consideration, to assume, to a specified extent, the losses suffered by the Insured.

INSURANCE POLICY
Legal document issued to the Insured setting out the terms of the contract of insurance.

INSURED
The person (or persons) whose risk of financial loss from an Insured peril is protected by the policy. Sometimes called the “policyholder”.

INSURED PERIL
A cause of loss which may be specifically expressed in the policy or be embraced in a general description, such as “all risks”. A peril which is not embraced within the policy conditions is termed an ‘uninsured’ peril.

INSURER
The Insurance Company.

IN TORT
A legal action outside a contract; a third party legal liability action is an example.

INVOICE
Documentary evidence of the sale contract and price of goods.

JETSAM
Goods jettisoned from a vessel.

JETTISON
Casting property overboard to lighten a vessel in time of peril.

JEWELLERY INSURANCE
Coverage on jewellery and precious stones on an all risks basis at any location subject to exclusions of wear and tear, war, and nuclear disaster. Each item must be specifically listed in the policy. This coverage is of importance to insured’s with valuable jewellery since most property insurance policies such as the homeowners insurance policy have relatively low limits of coverage for jewellery and precious stones.

JOINT TENANCY
Ownership of property shared equally by two or more parties under which the survivor assumes complete ownership. This is different from a tenancy in common where the heirs of a deceased party to the tenancy inherit his or her share.

JURISDICTION
The limit or extent within which the powers of a legal authority concerned with the administration of justice may be exercised.

JURISDICTION CLAUSE
A clause, in an insurance or reinsurance contract, which defines the area of legal authority in which any disputes between the parties, shall be settled.

KNOCK FOR KNOCK
The principle of single liability applied between Insurers. It is common in motor insurance where each Insurer bears the cost of repairing the vehicle which he insures without seeking to recover the cost from the Insurer of the other vehicle involved in the accident.

KNOT
A measurement of speed. One nautical mile per hour, a nautical mile measuring 6,080 feet.

LANDING CHARGES
Charges payable on cargo at the port of destination.

LATENT DEFECTS
A hidden flaw or defect which is not readily discoverable by a competent person using reasonable skill in an ordinary inspection.

LAPSE
Termination of a policy because of failure to pay the premium.

LAY-UP RETURNS
Provision in a marine hull policy that provides for a return of premium when the ship is laid up in protected waters for not less than a specified number of days.

LEADING UNDERWRITER
An Insurer whose lead is followed by other Underwriters on a placing slip.

LEGAL LIABILITY
A liability which can be enforced in a court of law.

LESSEE
The person to whom a lease is granted, commonly called the tenant.

LESSOR
The person granting a lease, also known as the landlord.

LETTER OF CREDIT
A document which authorizes payment of an agreed sum of money to the person named therein.

LIABILITY
A legal obligation, most often financial, to respond in damages in the event of an accident. It may be imposed by an act of law or assumed under a contract.

LIABILITY (COMBINED LIMIT)
Expression of the extent of coverage in a lump sum, whereby the entire amount expressed in the policy is available either per person or per accident regardless of whether the claim if for Bodily Injury or Property Damage or both.

LIABILITY INSURANCE
In an accident where you are charged with injuring another person or damaging his or her property, liability insurance pays the cost of your legal defence, as well as the cost of any damages for which you are found legally responsible.

LIABILITY LIMITS
The sum or sums beyond which a Insurance Company does not protect the Insured on a particular policy.

LIABILITY (SPLIT LIMIT)
Expression of the extent of coverage separately as to: per accident/per person (or occurrence) for Bodily Injury; Per Accident (or occurrence) for property damage.

LIBEL
A written statement about someone which is personally injurious to that individual.

LIEN
A legal right whereby a person may prevent another from taking possession of property until the other person has satisfied a liability due to the other person with the lien.

LIMIT ANY ONE VESSEL
In a marine cargo open cover, the limit of an Insurer’s liability on the value of cargo to be carried by any single vessel.

LINER
A vessel engaged on a regular run and keeping to a time schedule. The liner is considered to be a better risk than a “tramp” which is a vessel not engaged on a regular run.

LIVESTOCK INSURANCE
Insurance on horses, cattle and similar animals against death or injury. Often restricted to mortality risk only.

LIMIT OF LIABILITY
The maximum amount which an Insurance Company agrees to pay in case of loss.

LIMITS
Maximum amount a policy will pay either overall or under a particular coverage.

LLOYD’S
A Society of insurance Underwriters based in London, Lloyd’s of London takes its title from a coffeehouse run by a Mr. Edward Lloyd. The coffeehouse was frequented habitually by private insurance Underwriters during the 18th century. The foundation of the Society of Lloyd’s was established in an agreement dated December 13, 1771.

LLOYD’S AGENTS
Agents of the Corporation of Lloyd’s whose primary duty is to keep Lloyd’s informed of shipping movements, casualties and other matters of interest to Insurers and the commercial community. It has become customary for Underwriters and Insurance Companies to utilise the services of Lloyd’s Agents in connection with surveys of damaged vessels and cargo.

LLOYD’S CERTIFICATE OF CARGO INSURANCE
A document issued by Lloyd’s as evidence of a cargo insurance contract effected with Lloyd’s Underwriters. Certificates may be given in ‘blank’ form (already signed by the appropriate Lloyd’s department) to insurance brokers, merchants and others who are authorised to countersign and issue the certificates to Clients.

LLOYD’S REGISTER OF SHIPPING
The world oldest and largest independent non-commercial classification Society whose function is the classification of merchant ships, the establishment of standards for their construction and the provision of a worldwide technical service.

LLOYD’S UNDERWRITER
An underwriting member of Lloyd’s. A person applying for membership must meet be a person over 21 years of age of any nationality, male or female, and must satisfy the Committee of Lloyd’s standards, most importantly financial.

LOCATION CLAUSE
A clause in a marine cargo Open Cover limiting the insurers’ liability on property in one location prior to shipment.

LONDON MARKET
Lloyd’s and the London Insurance Companies.

LOSS
Generally refers to (1) the amount of reduction in the value of an Insured’s property caused by an Insured peril, (2) the amount sought through an Insured’s claim, or (3) the amount paid on behalf of an Insured under an insurance contract.

LOSSES OCCURRING BASIS
With this type of liability policy the Insurer is responsible for all losses that occur during the policy period even though they may come to light some years after the policy period has expired. Typical examples are in Employer’s Liability insurance where certain diseases in employees (e.g. asbestosis of the lungs) manifest themselves many years after the insurance policy period has passed.

LOSS OF SPECIE
Occurs where the insured property is so damaged that it ceases to be a thing of the kind insured, that is, it changes its specie. An example would be bags of cement which have been immersed in water.

LOSS OF USE INSURANCE
Coverage to compensate an Insured for the loss of use of property if it cannot be used because of a peril covered by the policy.

LOSS RESERVE
A statement of condition, or balance sheet account set up by an Insurer based on its expectations about future insurance claims. As claims occur, they are charged against this reserve.

MARINE INSURANCE
An Insurer who enters into a contract with the Insured agreeing to indemnify the Insured, subject to the limits of the contract, for losses incidental to a marine adventure.

MARINE POLICY
A contract of marine insurance is concluded between the parties when the proposal is accepted by the Insurer. However, the contract is inadmissible as evidence into a court of law unless it is embodied into a marine policy.

INLAND MARINE INSURANCE
Inland marine insurance indemnifies loss to moving or movable property and is an outgrowth of ocean marine insurance. Historically, ocean marine insurance held the transporter responsible for property loss before, during, and after the completion of the voyage.

MARINE CARGO
Broadly, insurance covering loss of, or damage to, goods at sea. Marine insurance typically compensates the owner of merchandise for losses in excess of those which can be legally recovered from the carrier. Losses may include fire, shipwreck, piracy, inclement weather and various other causes.

OCEAN MARINE INSURANCE
Insures boats, vessels, and cargo transported over water.

MARINE HULL INSURANCE
Coverage of the hull of a ship and its tackle, passenger fittings, equipment, stores, boats, and ordinance.

MARINE UNDERWRITER
One who accepts liability for marine losses.

MARITIME PERILS
Perils of the seas and incidental thereto.

MATERIAL CIRCUMSTANCE
A circumstance is material if it would affect the decision of the Insurer to accept the risk or in the rating of the premium.

MATERIAL CIRCUMSTANCE
A circumstance is material if it would affect the decision of the Insurer to accept the risk or in the rating of the premium. Non-disclosure of a material circumstance entitles the Insurer to avoid the insurance contract.

MEDICAL EXPENSE
The cost of paying medical bills for physicians, surgeons, technicians, nurses or other medical personnel.

MARKET VALUE
The price for which something would sell, especially the value of certain types of assets, such as stocks and bonds. It is based on what they would sell for under current market conditions. For example, common stock market value would be the price of the stock as of a specified date.

MATERIAL MISREPRESENTATION
The policyholder / applicant makes a false statement of any material circumstance on his/her application. For instance, the policyholder provides false information regarding the location where the vehicle is garaged.

MECHANICAL DERANGEMENT
Certain types of light machinery and electrical equipment may be found ‘not working’ although they are no outward signs of damage. It is usual in marine insurance to exclude this type of loss.

MINIMISING A LOSS
The duty of the Insured or his agents, by policy terms or statute law, to take such measures as may be reasonable for the purpose of averting or minimising a loss.

MINIMUM PREMIUM
The least amount of premium for which a policy or coverage may be issued or initiated.

MORAL HAZARD
An attitude that increases the probability of loss from a peril. The attitude of, “It’s Insured; so why worry?” is an example of a morale hazard.

MORTGAGEE
The creditor to whom a mortgage is given and who lends money on the security of the value of the property mortgaged.

MORTGAGEE CLAUSE
A clause in an insurance policy giving beneficial rights under the policy to a mortgagee or other lender of money on the security of the property insured.

MORTGAGE INSURANCE POLICY
In life and health insurance, a policy the benefits from which are intended to pay off the balance due on a mortgage or meet the payments on a mortgage as they fall due upon or after the death or disability of the Insured.

MORTGAGOR
The debtor who receives money and in turn grants a mortgage on his property as security for a loan.
MOTOR INSURANCE- Insurance purchased by the owner of a vehicle to cover losses due to traffic accidents or theft

MUTUAL INSURANCE
A group of persons who engage to contribute rateably to the losses of one of the members of the group.

MYSTERIOUS DISAPPEARANCE
The disappearance of insured property from no known cause.

NAMED INSURED
The first person in whose name the insurance policy is issued.

NAMED PERILS
Named perils are the specific dangers a policy insures you against
such as fire, windstorm, and hail in a homeowner’s policy, for example. These perils are “named” or listed in the policy.

NEGLIGENCE
Failure to use that degree of care which an ordinary person of reasonable prudence would use under the given circumstances. Negligence may be constituted by acts of either omission or commission or both.

NEGOTIABLE INSTRUMENT
A document of value which is negotiable, it can be endorsed to give another party to another party beneficial rights.

NEW FOR OLD
An agreement by an Insurer not to subtract amounts for depreciation or wear & tear from a claim presented for replacement ‘as new’ of insured property damaged or destroyed.

NO-FAULT INSURANCE
No-fault insurance is designed to speed up claims payments to accident victims and to lower the cost of auto insurance by reducing the number of lawsuits for minor claims. Under no-fault insurance, a person’s own Insurance Company pays for financial losses like medical expenses and lost wages due to an accident, regardless of who caused it. (In a fault system, your expenses won’t be paid by the other party’s Insurance Company until he or she has been proved negligent.) In exchange, the right to sue may be restricted in some cases.

NON-ADMITTED INSURER
An insurance company which is not licenced to insure business in a country, state or territory.

NON-DISCLOSURE
The failure of either party to an insurance contract, to reveal to the other, any material fact or circumstance which is known or should be known to either. The offended party may avoid the contract.

NOTICE OF ABANDONMENT
Notice which is a condition precedent to a claim for constructive total loss of hull or cargo in marine insurance.

NOTICE OF CANCELLATION
A clause in an insurance contract which grants either party the right to cancel the insurance giving the required notice in writing. A refund of premium is normally given to the Insured.

OCCASIONAL DRIVER
The person who is not the primary or principal driver of the vehicle.

OCCUPANCY
In insurance, this term refers to the type and character of the use of property in question.

OCCURRENCE
An event that results in an Insured loss. In some lines of insurance, such as Liability, it is distinguished from accident in that the loss does not have to be sudden and fortuitous and can result from continuous or repeated exposure which results in bodily injury or property damage neither expected nor intended by the Insured.

OPEN COVER
A contract for cargo insurance to cover all shipments from time to time as declared, a certificate of insurance or policy being issued in respect of each. The arrangement is subject to cancellation on notice by either party.

OPEN POLICY
(See ‘Open Cover’).

ONUS OF PROOF OF CLAIM
The onus of proof of claim lies with the claimant who must prove his loss in terms of the right to claim and the quantum of the claim.

arriage and the transit must be conducted by the most direct route to the specified destination without unreasonable delay.

ORDINARY LEAKAGE
Inevitable loss in volume of cargo during the period of cover under marine cargo insurance.

OUTSTANDING CLAIMS
Claims which have been provisionally advised by the Insured(s) but which are in the process of investigation and thus have not been settled.

OUTTURN REPORT
Report on the amount or weight of cargo discharged from a ship either on a daily basis or on the whole outturn.

OVERAGE
Additional premium payable on a marine insurance open cover or policy when the insured goods are carried on a vessel which does not come within the scope of the Institute Classification Clause, usually because it is too old.

P&I
Protection and Indemnity; Protecting and Indemnity.

P&I CLUB
Protection and Indemnity Club.

PARTIAL LOSS
A loss under an insurance policy which does not either (1) completely destroy or render worthless the Insured property, or (2) exhaust the insurance applying thereto.

PARTICULAR AVERAGE
In marine insurance, partial loss of the subject matter insured caused by an insured peril.

PERIL
Cause of a possible loss. For example, fire, theft, or hail.

PERILS OF THE SEAS
Fortuitous accidents which cause loss of or damage to hull or cargo covered by a marine policy. The ordinary action of wind and waves is not a peril of the sea.

PERSONAL ACCIDENT
A policy that will pay out an income or a lump sum caused by outward violence which shall directly and independently of any other cause resulting in accidental death, disablement/ dismemberment. Personal Accident Insurance is not Life Assurance.

PROFESSIONAL INDEMNITY
The insured’s liability at law for damages and claimants costs and expenses in respect of claims for breach of professional duty made against the insured and notified during any period of insurance by reason of any neglect, error or omission occurring or committed in good faith in connection with the business.

PERSONAL INJURY
Injury other than bodily injury arising out of false arrest or detention, malicious prosecution, wrongful entry or eviction, libel or slander, or violation of a person’s right to privacy committed other than in the course of advertising, publishing, broadcasting or telecasting.

PERSONAL PROPERTY
Any property of an Insured other than real property. Homeowner policies protect the personal property of family members, and commercial forms are used to protect many types of business personal property of an Insured.

PERSONAL PROPERTY LIMITATIONS
Don’t assume everything you own is adequately Insured by a standard homeowner’s policy. The typical homeowner’s policy provides only limited coverage for many expensive items. Extra coverage can be purchased separately.

PHYSICAL DAMAGE
A generic term indicating actual damage to property.

PHYSICAL HAZARD
The material, structural, or operational features of the risk itself, apart from the moral hazards of the persons owning or managing it.

PILFERAGE
Petty theft, especially theft of articles in less than package lots.

POLICY
Legal document issued to the Insured setting out the terms of the contract of insurance.

POLICY ASSIGNMENT
The transfer of beneficial rights in a policy form the insured to another party. The insured becomes the “assignor” and the other party becomes the “assignee”.

POLICY CONDITIONS
The conditions expressed in the policy document and any endorsements attached thereto.

POLICY EXPIRATION DATE
The date when your current insurance policy expires. This date can be found on your current policy renewal schedule, insurance identification card, or recent cancellation notice. This date is not to be confused with the date of your next payment or the date when your renewal payment is due.

POLICY LIMIT
The maximum amount a policy will pay, either overall or under a particular coverage.

POLICY PERIOD (OR TERM)
The period during which the policy contract provides protection, e.g., six months or one or three years.

POLICYHOLDER
The person (or persons) whose risk of financial loss from an Insured peril is protected by the policy.

POLITICAL VIOLENCE INSURANCE
the broadest form of Sabotage and Terrorism Insurance covering several types of political risks including revolution, insurrection, civil unrest, terrorism and war.

POLLUTION
Waste material which cannot be absorbed by the surroundings in which it is discharged.

POLLUTION EXCLUSION CLAUSE
A clause which excludes claims for legal liability of the insured in connection with pollution or contamination of the environment.

PORT RISKS INSURANCE
A type of marine insurance by which a ship is insured whist it is in the confines of a specified port area. An alternative form of cover allows the ship to navigate outside the port area.

PREMISES
The particular location of property or a portion thereof as designated in a policy.

PREMIUM
The amount of money an Insurance Company charges for insurance coverage.

PRIMARY POLICY
The basic or primary layer of coverage, the initial policy that will respond to the covered loss. Only when the limits of the underlying policy have been exhausted, will the other respective layers of insurance respond, as with the case of an excess or umbrella policy in liability insurance

PRIMARY RESIDENCE
The place where you will reside for the majority of your policy term.

PRINCIPLE DRIVER
The person who drives the car most often.

PRIVATE MOTOR
Accidental Loss of or damage to the Insured’s vehicle including the Insured’s Legal Liability for causing death or bodily injury to Third Party and for damage to Third Party property.

PROFESSIONAL LIABILITY INSURANCE
Liability insurance to indemnify professionals, doctors, lawyers, architects, etc. for loss or expense resulting from claim on account of bodily injuries because of any malpractice, error, or mistake committed or alleged to have been committed by the Insured in his profession.

PROHIBITED RISK
Any class of business which an Insurance Company will not insure under any condition.

PROOF OF LOSS
A formal statement made by the Insured to the Insurance Company regarding a loss. The purpose of the proof of loss is to place before the Company sufficient information concerning the loss to enable it to determine its liability under the policy.

PROPERTY DAMAGE LIABILITY
Pays when an Insured person is legally liable for damage to the property of others caused by your vehicle or your operation of most non-owned vehicles. This coverage also pays for your legal defence costs if you are sued.

PROPERTY INSURANCE
Property Insurance indemnifies an Insured whose property is stolen, damaged, or destroyed. The basis of cover can either be on a named perils basis or all risks basis. The term property insurance includes direct or indirect property losses covered in several lines of insurance.

PROTECTION
(1) Term used interchangeably with the word “coverage” to denote the insurance provided under the terms of a policy.
(2) Term used to indicate the existence of fire-fighting facilities in an area known as a “protected” area.

PROTECTION AND INDEMNITY INSURANCE
Coverage for watercraft. It protects the insured from liabilities, from bodily injury, or property damage arising out of the use, or ownership of declared vessels.

PROTEST
A declaration signed by the master of a ship in respect of damage to cargo.

PROXIMATE CAUSE
Every event is the outcome of a chain (or net) of previous events, but in the words of Bacon “It were infinite for the law to consider the causes of causes, and their impulsions one of another; therefore it contenteth itself with the immediate cause”. This immediate or effective cause, not necessarily that closest in time to the event, is termed the proximate cause.
Unless the insurance policy otherwise provides the Insurer is liable for any loss which is proximately caused by an insured peril.

PUBLIC LIABILITY
Covering the Insured’s Legal liability for accidental death and/or bodily injury (including illness or disease) to third parties or loss of/or damage to third party property arising out of the insured’s business anywhere in Trinidad & Tobago

PUNITIVE DAMAGES
In an action for liability, damages awarded by a Court as a punishment against the defendant.

QUANTUM OF INTEREST
The insurable interest of a mortgagee in the insured property up to the amount due under the mortgage.

QUOTE (QUOTATION)
An estimate of the cost of insurance, based on information supplied to the Insurance Company by the applicant.

RATE
The per unit cost of insurance. (See also Premium). Usually expressed as a percentage which will be applied to the sum insured to calculate the premium.

RATED
Usually used in combination, rated-up or rated policy. A policy issued with an extra premium charge

RECOVERY Money received by an insurer in respect of a loss, thus reducing the loss, by way of subrogation, salvage or reinsurance.

RED LINE CLAUSE
A clause printed in red on marine cargo policies and certificates. Its purpose is to remind the Insured of the measures that need to be taken when good are delivered damaged or are not delivered.

REIMBURSEMENT
Payment of an amount of money related to the amount of the loss to or on behalf of the Insured upon the occurrence of a defined loss.

REINSTATEMENT
(1) Restoring a lapsed policy back in force. The reinstatement may be effective after the cancellation date, creating a lapse of coverage. Some companies require evidence of insurability and payment of past due premiums plus interest.
(2) A practice whereby the amount which has been the subject of a claim is reinstated in the policy on payment of an additional premium; thus reverting the amount of cover which was reduced by the claim to the original sum insured.

REINSURED
An Insurer who has reinsured his liability with another Insurer, who becomes the Reinsurer.

REINSURER
An Insurer who agrees to reimburse another Insurer in respect of claims on the latter’s liability.

REINSURANCE
(1) A contract of indemnity against liability by which the Insurance Company procures another insurance to insure it against loss or liability by reason of the original insurance. (2) Insurance by one Insurance Company of all or part of a risk accepted by it with another Insurance Company which agrees to reimburse the Insurance Company for the portion of the claim reinsured. The Insurance Company obtaining the reinsurance is called the “ceding Insurance Company;” the Insurance Company issuing the reinsurance is called the “Reinsurer.” A Reinsurer may, in turn, seek reinsurance on some portion of the risk it has Reinsured, a process known as “retrocession.”

REMOTE CAUSE OF LOSS
A remote cause is one which contributed to the loss but was not the proximate cause of the loss. In the absence of any special provision in the policy, a loss must be proximately caused by an insured peril to be recoverable under the policy.

REMOVAL OF WRECK
A vessel sunk in a harbour or some other place where it is a danger to shipping may be marked, lighted or destroyed by the Authorities and the cost of so doing charged to the owner of the vessel. Where a marine hull policy covers P&I risks, the Insurer will reimburse expenses for removal of wreck.

RENEWAL
The continuation in full force and effect of something that is about to expire. With an insurance policy it is made either by the issuance of a new policy or renewal receipt or certificate, to take effect upon the expiration of the old policy.

REPLACEMENT CLAUSE
In cargo insurance covering machinery, this clause provides that in respect of damage the Insurer’s liability is limited to replacing and fitting the broken part.

REPLACEMENT COST – The total cost of labor, materials and services necessary to replace property in its entirety, with materials of like kind and quality, without deduction for depreciation.

REPRESENTATION
A statement of fact, belief or expectation made by the Insured and/or his broker to the Insurer when placing the insurance.

RETENTION
An amount held back or not released; in reinsurance, it is the proportion of the line written by the original Insurer that is not ceded to the reinsurer.

RIDER
Usually known as an endorsement, a rider is an amendment to the policy used to add or delete coverage.

RIOT
A circumstance where twelve or more persons use or threaten violence for some common purpose.

RISK
(1) A chance of loss. (2) A person or thing Insured. (Impaired or substandard risk: An applicant whose physical condition or moral habits do not meet the standard on which the rate is based).

RISK MANAGEMENT
Management of the pure risks to which a Company might be subject. It involves analyzing all exposures to the possibility of loss and determining how to handle these exposures through such practices as avoiding the risk, retaining the risk, reducing the risk, or transferring the risk, usually by insurance.

ROBBERY
The felonious taking, either by force or by fear of force, of the personal property of another, commonly known as “hold-up.”

SALVAGE
(1) In marine insurance: an award payable to a third party for services rendered to preserve maritime property from peril at sea.
(2) In property insurance: the residual monetary value of insured property damaged as a result of an insured peril.

SALVAGE CHARGES
Money properly payable in an award to a third party acting independently of contract to preserve the property insured in a maritime adventure from an insured peril.

SCHOONER
A two-masted sailing vessel built with sharp lines for speed.

SEAWORTHINESS
In marine insurance, every voyage policy (hull or cargo) carries an implied warranty that the vessel is seaworthy at the commencement of the voyage.

SECURITIES
In Crime (‘Money’) insurance, all negotiable or non-negotiable instruments or contracts

SELLER’S INTEREST
The insurable interest of the seller of the goods covered by a marine cargo insurance policy.

SERVICE OF SUIT
Instituting proceedings at law to pursue an action against a party to settle a dispute. In the absence of any provision to the contrary, a suit can be served under any jurisdiction.

SERVICE OF SUIT CLAUSE
A provision in an insurance policy stating the jurisdiction that the Insurer agrees to accept for service of suit representing either money or other property. It includes stamps, tokens and tickets, but does not include money.

SETTLEMENT
Usually, a policy benefit or claim payment. It connotes an agreement between both parties to the policy contract as to the amount and method of payment.

SPECIFIED PERILS
An optional coverage designed to provide basic protection for your vehicle for loss or damage resulting from incidents specifically stated in your policy. A few examples of the types of losses Insured under named perils coverage include fire, lightning, theft, explosion, earthquake, windstorm and hail. This coverage is optional and may be purchased in addition to the mandatory coverages required by law, and it is subject to a deductible.

SHORTAGE
Circumstances where marine cargo is delivered to the consignee in a lesser amount or quantity than should have been delivered.

SPECIAL PERILS
An optional coverage designed to provide protection for your property or vehicle in respect of loss or damage resulting from incidents not specifically stated in the policy. A few examples of the types of losses Insured under the ‘special perils’ extension are: flood, earthquake, malicious damage, bursting or overflowing of water tanks, apparatus and pipes, riot and civil commotion.

SPONTANEOUS COMBUSTION
Self-ignition of combustible material through chemical action (as oxidation) of its constituents. In marine shipments, it may occur when cargo such as soft coal or lignite is loaded in a wet condition.

SPREADING THE RISK
One of the basic principles of insurance where an Insurer seeks to limit his exposure on a particular location. He may do so by (1) Accepting only part of a risk offered to him thereby spreading the risk over a number of Insurers and (2) Seeking to reinsure a portion of the line he has accepted with other Insurers.

SETTLING AGENT
An agent authorised to pay claims under an insurance policy.

STRANDING
With regard to a vessel: to run, drive, or cause to drift onto a strand: run aground. The vessel must be hard and fast for an appreciable period of time; a mere touch and go or a grounding due to the rise and fall of a tide would not constitute stranding.

STRIKE
Sudden and dramatic cessation of work by common agreement to obtain remedy for grievance or better working conditions.

SUBJECT MATTER INSURED
The subject matter exposed to risk to which the Insured’s insurable interest attaches.

SUBROGATION
The right of an Insurance Company to step into the shoes of the party whom they compensate and sue any party whom the compensated party could have sued as a means of recouping the loss.

SUE AND LABOR CLAUSE
A clause in a marine insurance policy whereby the insurer accepts liability for charges incurred by the insured in seeking to preserve his property from loss or to minimise a loss that would be covered by the policy. The insured is said to sue and labour for the protection of his property.

SUM INSURED
The maximum amount of liability of the Insurer under an insurance policy. The premium rate is applied to the sum insured to determine the policy premium.

SURVEY FEE
The fee payable to a surveyor for his services in carrying out a survey and issuing a survey report.

SURVEYOR
A competent person with knowledge and skill to carry out a survey on insured property that has been damaged and to produce a survey report.

SURVEY REPORT
The report prepared by the surveyor which is submitted by the claimant with his claim and which gives details of damage to the insured property.

SYNDICATE
A group of underwriting members at Lloyd’s that offers a consolidated facility in which each member accepts his proportion of liabilities accepted on behalf of the syndicate by the active underwriter. The active underwriter may be a member of the syndicate or a salaried employee.

THEFT
Any act of stealing. Theft includes larceny, burglary and robbery.

THIRD PARTY INSURANCE
Protection of the Insured against liability for damage to or destruction of the bodies or property of others.

TOTAL LOSS
A loss of sufficient size so that it can be said there is nothing left of value. The complete destruction of the property. The term is also used to mean a loss requiring the maximum amount a policy will pay.

TRANSFER OF RISK
Shifting all or part of a risk to another party. Insurance is the most common method of risk transfer, but other devices, such as hold harmless agreements, also transfer risk. One of the four major risk management techniques. (See ‘Risk Management’).

TRAVEL INSURANCE
insurance that is intended to cover medical expenses and financial (such as money invested in non-refundable pre-payments) and other losses incurred while travelling, internationally.

TRANSHIPMENT
Taking goods off one vessel and loading them onto another.

TRANSIT CLAUSE
A clause in marine and aviation cargo policies providing that the cover attaches from the departure from the place of storage at a place named in the policy until the cargo arrives at a place of storage at a named destination or at some alternative place.

TREATY REINSURANCE
A contractual agreement between an insurance company and a reinsurer which allows the insurer to automatically cede or ‘transfer’ part of the risks that they accept.

UMBRELLA LIABILITY POLICY
a policy that pays for liability losses in excess of those covered in the primary liability policies (e.g., motor and public liability).

UNDERINSURANCE
When an insurance policy is effected for an amount that is less than the value at risk there is underinsurance.

UNDERLYING POLICY
The basic or primary layer of coverage, the initial policy that will respond to the covered loss. Only when the limits of the underlying policy have been exhausted, will the other respective layers of insurance respond, as with the case of an excess or umbrella policy in liability insurance

UNDERWRITER
(1) A person trained in evaluating risks and determining the rates and coverages that will be used for them. (2) An agent, especially a life insurance agent, who might qualify as a “field underwriter.” In theory, the agent is supposed to do some underwriting before submitting the case to the home office underwriter; i.e., to make a decision on the basis of facts known to him on whether or not the risk is sound and to report all facts known to him that might affect the risk.

UNDERWRITING
The process of evaluating a risk for the purpose of issuing insurance coverage on it.

UNDERWRITING AGENT
An agent of an insurance company who underwrites business on behalf of the company.

UNITISATION
The practice of placing several packages of cargo into a single unit or container in order to expedite and make easier the loading, stowage or discharge of such goods.

UNSTUFFING
The practice of removing goods from a cargo container. Sometimes termed ‘stripping a container’.

UTMOST GOOD FAITH
Insurance contracts are one of a limited class that requires the parties (insurer and insured) to exercise the utmost good faith in their dealings with each other. Specifically the proposer of an insurance must disclose all material facts which would influence a prudent insurer in deciding whether to accept the insurance and if so on what terms.

VANDALISM
Used synonymously with malicious mischief; willful physical damage to property.

VALUATION
Estimation of the value of an item, usually by appraisal.

VALUATOR
A competent person with knowledge and skill to carry out an appraisal and to produce a valuation report.

VALUED POLICIES
A marine policy that specifies the value of the subject matter insured usually with the words “valued at” or “so valued”.

VOIDABLE POLICY
An insurance policy is said to be voidable where circumstances exist that entitle either one of the parties to “avoid the contract”. It is usually the Insurer who finds himself in this position when there has been a breach of ‘utmost good faith’ by the Insured.

WAIVER
(1) A rider waiving (excluding) liability for a stated cause of accident or (especially) sickness. (2) A provision or rider agreeing to waive (forego) premium payment during a period of disability. (3) The giving up or surrender of a right or privilege that is known to exist. It may be effected by the agent, adjuster, or Insurance Company employee or official orally or in writing.

WAREHOUSE TO WAREHOUSE COVER
A term used loosely to show that cargo is insured against all the perils expressed in a marine cargo policy throughout the whole period of the transit.

WARRANTY
In a contract of insurance, either (a) a promissory undertaking by the insured that some particular thing shall or shall not be done, or that some condition shall be fulfilled or that a particular state of facts is affirmed or negatived. It must be exactly complied with. A breach entitles the insurer to deny liability; or (b) a requirement by the insurer as to some limitation of cover, e.g. “Warranted free of capture and seizure” in marine insurance.

WEAR AND TEAR
the loss to which something is subjected by or in the course of ordinary use; normal depreciation

WITHOUT PREJUDICE
Term used in discussion and correspondence. Where there is a dispute or negotiations for a settlement and terms are offered “without prejudice” an offer so made or a letter so marked and subsequent letters in an unbroken chain cannot be admitted in evidence without the consent of both parties concerned.

WORKMENS COMPENSATION
the Insured’s legal Liability for Accidental Death of/or Bodily Injury (including illness or disease) to all employees arising out of and during the course of employment in accordance with:
(1) Workmen’s Compensation Ordinance 24 of 1960
(2) Compensation for Injuries Ordinance Chapter 88:05 (1896)
(3) Common Law $2,500,000.00

XCU
A term used in commercial general liability insurance to designate that three hazards exist for the classification under review. Those three hazards are explosion, collapse and underground. The current CGL includes those coverages automatically in the basic form, but they may be deleted by endorsement.

xs.
Excess

X/S
Excess

YEARLY RENEWABLE TERM INSURANCE (YRT)
This is a form of term life insurance that may be renewed annually without evidence of insurability to a stated age.

YACHT POLICY
A policy, which provides cover for yachts (pleasure craft) in respect of own damage and third party liabilities. The terms of cover are usually based upon the Institute Yacht Clauses which are published by the Institute of London Underwriters.

ZONE RATING
In commercial automobile insurance, those risks that have a radius of operation of over 300 miles, and fall into the long-haul category, are rated on the zone they travel in using the city of origin and the city of destination to determine the zone category.

ZABRA
Type of vessel used on the coast of Spain.