Background of Insurance Broking in India
Like other countries, In India Insurance Broking concept was introduced by the Regulator known as Insurance Regulatory & Development Authority of India (IRDAI) through Insurance Brokers Regulation 2002 and amended in 2013. The Regulations clearly defines the functions and code of conduct of an Insurance Broker.
Who is an Insurance Broker?
- An Insurance Broker is a specialist in insurance and risk.
- Brokers act on behalf of their clients and provide advice in the interests of their clients.
- A broker will help you identify your individual and/or business risks to help you decide what to insure, and how to manage those risks in other ways.
- Insurance brokers can give you technical advice that can be very useful if you need to make a claim.
- Brokers are aware of the terms and conditions, coverage’s and exclusions and costs of a wide range of competing insurance policies, so they can help you find the most appropriate cover for your own circumstances.
- Brokers can help arrange and place the cover with the chosen insurer.
Why do we need an Insurance Broker ?
- Some insurance policies can be complicated, and an insurance broker can help you understand the details of a policy and also work out what level of cover you need, so that you can make sure you are properly protected.
- Brokers can often find you a good deal on insurance because they have a thorough understanding of the insurance market and can negotiate premiums on your behalf.
- A broker will explain your policy to you and advise you if there are any special situations you need to know about.
- Brokers can prepare a customised insurance and risk management program for you or your business, where they design the policies, negotiate the terms with insurance companies and place the cover with the insurer.
- By including a risk management program, which puts some of the responsibility for risk prevention and loss minimisation on you or your business, you can reduce premium costs.
- The using the broker doesn’t cost more than going direct as they are paid the brokerage by the Insurers for selling their products.
- If you need to make a claim on your policy, your broker will assist you through the process and will liaise with the insurer on your behalf.
Glossary on General Insurance Terms starting with C
COORDINATION OF BENEFITS (COB) : Method used within group health plans for designation of the order followed by multiple carriers towards payment of the benefits and prevent duplicating benefits
CORRIDOR DEDUCTIBLE : Important medical plan deductible excluding the benefits provided through basic plan when both the basic and supplemental group major medical expenses plans are effective
COST BASIS : Amount attributable to any asset for income tax purposes; primarily used for determining loss or gain on the sale or transfer and determine value of gifts
COST CONTAINMENT : Controller reductions for inefficiencies in the allocation, consumption, or production of healthcare services that are contributing to higher than required costs
COST-OF-LIVING RIDER : A benefit that can be added to life insurance plans where the holder is allowed to procure one-year term insurance equalling percentage change in the CPI without providing insurability evidence
COST OF PURE RISK : Costs related to pure risks, such as those from shareholders perspective, insurance costs, retained costs, loss prevention costs, etc
COST OF RISK : Decrease in the value of business arising due to risks
COVERAGE : Scope of available protection under the insurance contract; any of the several risks covered within the policy
COVERAGE FOR DAMAGE TO YOUR AUTO : Component of the auto insurance cover insuring the payment for damages or theft of the insured vehicle; optional coverage useable for insuring collision as well as non-collision loss or damage
COVERED : Any individual covered under pension plan fulfilling the eligibility needs within the plan; person for whom the benefits have been accrued; or individual receiving the benefits under the coverage
COVERED EXPENSES : Medical, hospital, and other related expenses incurred by the insured person entitling her or him for receiving the benefits under the health plan; often connected with major medical plans; covered expenses are defined either through description, necessity, or reasonableness for specifying amount and type of expenses that are to be considered for calculating the benefits
COVERED PARTICIPANT : Individual covered under pension plan and has satisfied the eligbility norms of the plan; person towards whom benefits are accruing, or one receiving the benefits included in the plan
CREDIBILITY : Statistical measure of a variable results of which can be used to estimate future forecasts
CREDIBILITY FACTOR : Weightage given to individual insured’s previous experience for calculating the premium for future coverages
CREDIT HEALTH INSURANCE : Type of health insurance cover for borrower; specifically for installment purchase agreement; benefits cover various obligations of borrowers payable to the creditors
CREDIT INSURANCE : Guarantee for manufacturers, service organizations, wholesalers confirming payment towards shipped products or rendered services; applicable to part of working capital represented by the accounts receivable
CROP-HAIL INSURANCE : Protection from damages resulting to growing crops due to hail or other perils covered in the insurance contract
CROSS PURCHASE AGREEMENT : Specification of the terms under which the surviving partners or shareholders can acquire shares of a deceased partner or shareholder
CSR : Customer servicing representatives who support work done by the agents for various tasks needed to be completed within an organization or agency delivering services or handling client requests
CURRENT ASSUMPTION WHOLE LIFE INSURANCE : Non-participating whole life cover through which cash values are determined on the insurer’s current mortality, expense, and investment experience; accumulative account credited with current interest rate changing over a period of time; also known as interest-sensitive whole life insurance plan
CURRENTLY INSURED : Status of any covered individual under OASDI (old age, survivors, and disability insurance) plan for at least six quarters during the last 13 quarters ending in the quarter of demise; entitlement of retirement benefits; or disability
CANCELABLE POLICY : Insurance contract that is cancellable either by insured or insurer before the expiration of the policy
CAUSES OF LOSS : The various perils that are insured within the insurance plan
CLAIMANT : Person seeking reimbursement for any loss covered under the terms and conditions of the insurance policy
CLAIMS-MADE COVERAGE : Liability coverage only when written claims are made within the policy term or any extended period; policies with retroactive date, any occurrence before that date is not covered
CLASSIFICATION CLAUSE (CARGO) : Clause within cargo insurance open coverage that provides details of minimum classification for vessels bound overseas acceptable to insurers for carriage of the insured cargo paying premium rates agreed within the contract; cargo carried by lower class ships are covered but entail higher premium payment
CLAUSE : Section or para within the insurance policy explaining, clarifying, or defining conditions of the cover
COBRA : Consolidated Omnibus Budget Reconcilation Act; federal law through which group health policies sponsored by employers with more than 20 personnel should be offered continued coverage for past employees (resigning at free will or otherwise) and their dependants; giving health coverage for at least 18 months
COLLISION COVERAGE : Protection against physical damage for the policyholders’ owned vehicles resulting due to collision with any other thing or due to upset
COMMERCIAL GENERAL LIABILITY (CGL) COVERAGE PART : General liability cover written as monoline policy or component of commercial package; replacing former “comprehensive” general liability forms; latest forms offer sublines, broader coverage, with two variations “occurrence” and “claims made” covers
COMPREHENSIVE COVERAGE : Physical damage cover for losses resulting due to fire, falling objects, vandalism, thefts, and other risks; for personal automobile policies, known as other than collision coverage; commerical forms continues to refer to comprehensive cover
COMPREHENSIVE GENERAL LIABILITY POLICY : Policy covering different kinds of general liabilities, operations and premises, products liability, contractual liability, owners and contractors protective, completed operations, and broad form covers; most jurisdictions replace new commercial general liability forms including optional and standard covers in earlier forms
COMPREHENSIVE PERSONAL LIABILITY POLICY (CPL) : Personal liability contract providing personal liability cover for insured and family members needs resulting from various personal reasons; can include ownership of residential properties, pets, activities, sports, or other daily activities
CONSTRUCTIVE TOTAL LOSS : Partial loss resulting from sufficient degree for making the cost of repair much more or at least equal to the value of the property
CONTRACT CARRIER : Transportation company carrying goods for only certain clients and not general public (like general carriers)
CONTRIBUTION : More than one party provides risk cover; each insurer is responsible for protecting its loss; when assured recovers full compensation from one insurer, the company is entitled for recovering proportionate amounts from other insurers; generally used in marine insurance; also towards contributions paid by the insured connected to salvage or general coverage
CONTRIBUTORY VALUE : Value on the basis of which contribution towards general loss or salvage compensation is calculated
CO-PAYMENT : The component (either percentage or fixed amount) of medical bill paid by the patients; balance paid by the insurance company
COUNTRY DAMAGE : Marine term related to damage of bagged or baled goods resulting from excess moisture from dampness of the ground or exposure to climate or grit, sand or dust entering due to inclement weather or windstorm
COVER : Insurance contract; effective insurance, inclusions within the coverage under insurance plan
COVERAGE PART : Either one of individual commercial coverage components that is part of the commercial policy
COVERAGE TRIGGER : Method whereby particular claim being covered under the plan is determined; example difference between cover triggers of liability “occurrence” and “claims made” forms is in the first instance loss should occur during policy term and in the second instance claim must be filed during the policy period
COORDINATION OF BENEFITS (COB) : Method used within group health plans for designation of the order followed by multiple carriers towards payment of the benefits and prevent duplicating benefits
CORRIDOR DEDUCTIBLE : Important medical plan deductible excluding the benefits provided through basic plan when both the basic and supplemental group major medical expenses plans are effective
COST BASIS : Amount attributable to any asset for income tax purposes; primarily used for determining loss or gain on the sale or transfer and determine value of gifts
COST CONTAINMENT : Controller reductions for inefficiencies in the allocation, consumption, or production of healthcare services that are contributing to higher than required costs
COST-OF-LIVING RIDER : A benefit that can be added to life insurance plans where the holder is allowed to procure one-year term insurance equalling percentage change in the CPI without providing insurability evidence
COST OF PURE RISK : Costs related to pure risks, such as those from shareholders perspective, insurance costs, retained costs, loss prevention costs, etc
COST OF RISK : Decrease in the value of business arising due to risks
COVERAGE : Scope of available protection under the insurance contract; any of the several risks covered within the policy
COVERAGE FOR DAMAGE TO YOUR AUTO : Component of the auto insurance cover insuring the payment for damages or theft of the insured vehicle; optional coverage useable for insuring collision as well as non-collision loss or damage
COVERED : Any individual covered under pension plan fulfilling the eligibility needs within the plan; person for whom the benefits have been accrued; or individual receiving the benefits under the coverage
COVERED EXPENSES : Medical, hospital, and other related expenses incurred by the insured person entitling her or him for receiving the benefits under the health plan; often connected with major medical plans; covered expenses are defined either through description, necessity, or reasonableness for specifying amount and type of expenses that are to be considered for calculating the benefits
COVERED PARTICIPANT : Individual covered under pension plan and has satisfied the eligbility norms of the plan; person towards whom benefits are accruing, or one receiving the benefits included in the plan
CREDIBILITY : Statistical measure of a variable results of which can be used to estimate future forecasts
CREDIBILITY FACTOR : Weightage given to individual insured’s previous experience for calculating the premium for future coverages
CREDIT HEALTH INSURANCE : Type of health insurance cover for borrower; specifically for installment purchase agreement; benefits cover various obligations of borrowers payable to the creditors
CREDIT INSURANCE : Guarantee for manufacturers, service organizations, wholesalers confirming payment towards shipped products or rendered services; applicable to part of working capital represented by the accounts receivable
CROP-HAIL INSURANCE : Protection from damages resulting to growing crops due to hail or other perils covered in the insurance contract
CROSS PURCHASE AGREEMENT : Specification of the terms under which the surviving partners or shareholders can acquire shares of a deceased partner or shareholder
CSR : Customer servicing representatives who support work done by the agents for various tasks needed to be completed within an organization or agency delivering services or handling client requests
CURRENT ASSUMPTION WHOLE LIFE INSURANCE : Non-participating whole life cover through which cash values are determined on the insurer’s current mortality, expense, and investment experience; accumulative account credited with current interest rate changing over a period of time; also known as interest-sensitive whole life insurance plan
CURRENTLY INSURED : Status of any covered individual under OASDI (old age, survivors, and disability insurance) plan for at least six quarters during the last 13 quarters ending in the quarter of demise; entitlement of retirement benefits; or disability
CANCELABLE POLICY : Insurance contract that is cancellable either by insured or insurer before the expiration of the policy
CAUSES OF LOSS : The various perils that are insured within the insurance plan
CLAIMANT : Person seeking reimbursement for any loss covered under the terms and conditions of the insurance policy
CLAIMS-MADE COVERAGE : Liability coverage only when written claims are made within the policy term or any extended period; policies with retroactive date, any occurrence before that date is not covered
CLASSIFICATION CLAUSE (CARGO) : Clause within cargo insurance open coverage that provides details of minimum classification for vessels bound overseas acceptable to insurers for carriage of the insured cargo paying premium rates agreed within the contract; cargo carried by lower class ships are covered but entail higher premium payment
CLAUSE : Section or para within the insurance policy explaining, clarifying, or defining conditions of the cover
COBRA : Consolidated Omnibus Budget Reconcilation Act; federal law through which group health policies sponsored by employers with more than 20 personnel should be offered continued coverage for past employees (resigning at free will or otherwise) and their dependants; giving health coverage for at least 18 months
COLLISION COVERAGE : Protection against physical damage for the policyholders’ owned vehicles resulting due to collision with any other thing or due to upset
COMMERCIAL GENERAL LIABILITY (CGL) COVERAGE PART : General liability cover written as monoline policy or component of commercial package; replacing former “comprehensive” general liability forms; latest forms offer sublines, broader coverage, with two variations “occurrence” and “claims made” covers
COMPREHENSIVE COVERAGE : Physical damage cover for losses resulting due to fire, falling objects, vandalism, thefts, and other risks; for personal automobile policies, known as other than collision coverage; commerical forms continues to refer to comprehensive cover
COMPREHENSIVE GENERAL LIABILITY POLICY : Policy covering different kinds of general liabilities, operations and premises, products liability, contractual liability, owners and contractors protective, completed operations, and broad form covers; most jurisdictions replace new commercial general liability forms including optional and standard covers in earlier forms
COMPREHENSIVE PERSONAL LIABILITY POLICY (CPL) : Personal liability contract providing personal liability cover for insured and family members needs resulting from various personal reasons; can include ownership of residential properties, pets, activities, sports, or other daily activities
CONSTRUCTIVE TOTAL LOSS : Partial loss resulting from sufficient degree for making the cost of repair much more or at least equal to the value of the property
CONTRACT CARRIER : Transportation company carrying goods for only certain clients and not general public (like general carriers)
CONTRIBUTION : More than one party provides risk cover; each insurer is responsible for protecting its loss; when assured recovers full compensation from one insurer, the company is entitled for recovering proportionate amounts from other insurers; generally used in marine insurance; also towards contributions paid by the insured connected to salvage or general coverage
CONTRIBUTORY VALUE : Value on the basis of which contribution towards general loss or salvage compensation is calculated
CO-PAYMENT : The component (either percentage or fixed amount) of medical bill paid by the patients; balance paid by the insurance company
COUNTRY DAMAGE : Marine term related to damage of bagged or baled goods resulting from excess moisture from dampness of the ground or exposure to climate or grit, sand or dust entering due to inclement weather or windstorm
COVER : Insurance contract; effective insurance, inclusions within the coverage under insurance plan
COVERAGE PART : Either one of individual commercial coverage components that is part of the commercial policy
COVERAGE TRIGGER : Method whereby particular claim being covered under the plan is determined; example difference between cover triggers of liability “occurrence” and “claims made” forms is in the first instance loss should occur during policy term and in the second instance claim must be filed during the policy period
Glossary on General Insurance Terms starting with B
BALANCE AS PER CONTRA : Insurance companies at times invest funds and create investments specific to the funds. These assets cannot be categorized as the insurance company’s assets. These are shown as assets combined with the words “as per contra”, which imply similar amounts being shown on the liabilities side also. The liability side balance depicts the investments made on behalf of the funds.
BALANCE SHEET : Depicts the snapshot on a company’s financial situation at a given point in time. The balance sheet shows the value of total assets, surplus, capital, and liabilities on the given date. This statement is prepared in the format prescribed by the IRDA on the last day of every financial year. The balance sheet gives the value of the assets and liabilities (which must be equal) on a particular date.
BALANCE SHEET RESERVES : This is the amount shown as the liability in the balance sheet for the benefits that are owed to the policy holders. The reserves are determined according to the Insurance Act guidelines, actuarial formulae, and the IRDA regulations. The reserves guarantee that policyholders will receive their benefits for all the premiums paid by them.
BALANCES- AGENTS : Most insurance companies rely on agents to get business. The premiums are accounted according to the agents to calculate the dues payable or receivable from them at the end of the financial year. Because number of transactions is huge, the transactions are classified as premiums and commissions. The debit balances are reflected as assets and credit balances as liabilities in the balance sheet.
BALANCES- AGING OF : Account balances comprise various entries during the year and at the end of the year. The balances could result either from last few transactions or through initial few transactions. Identifying the period for which these transactions have remained outstanding is crucial. Meaningful analysis to adapt the necessary steps is needed, which can be done by classifying the end of year balances as per the age of the various transactions.
BALANCES- COINSURANCE : Certain risks are shared between direct insurance companies at the insured individuals’ instances and are known as coinsurance transactions. The lead insurer collects the entire premium amount and distributes it among the various co-insurers. For claims, the money is first paid by the lead service provider and the respective amounts are then collected from other insurers. All these transactions are done through co-insurance company codes and the balances are either shown as assets or liabilities.
BALANCES- CONFIRMED : Balances in the insurance company’s account may be arising from transactions done with external parties and these balances need to be confirmed to assert their correctness. Confirmed balances are important to ensure the correctness of the transactions.
BALANCES- INTER BRANCH/ OFFICE : Insurance companies with multiple branches undertake transactions between the head office and branches as well as within different branches. The balances under each of the branch accounts are classified under Inter Branch Account Balances and reflect in the insurer’s balance sheet.
BALANCES- RECONCILED : The different account balances at the end of the financial year comprise several accounting entries. Every entry within each account must be reconciled with the corresponding entry to explain the items reflected in the account balance at the year end. When this detailed analysis is completed, the balances are known as reconciled else are referred to as reconciled balances.
BALANCES-REINSURANCE COMPANY : Direct insurers have treaty or facultative based transactions with reinsurers. Such transactions are related either to claim recoveries or premium cessions as well as reinsurance commission contracts. The balances in reinsurance accounts are grouped under the respective balances and shown as assets or liabilities based on the nature of these balances.
B/L : Bill of Lading is the receipt signed on the ocean carrier’s behalf. It indicates the condition and order of the goods that are received on board. This may not be the entire carriage of goods contract and is generally the evidence of the agreement. Because it is a title document, the bill of lading is also a transfer document.
BACK OFFICE : It is the controlling office that has no direct business but controls and monitors the different sales offices. Primary functions include checking accounting records, ensuring compliance by the marketing offices to all the regulatory guidelines, and company guidelines and directives. It is also responsible for communicating with the sales offices about matters related to the needs of either side.
BACKLOG : This refers to proposals that remain unattended, un-responded references or enquiries, documents and/or policies that are not issued, and claims that are still not disposed.
BACK-UP XL COVERS : There are situations when the XL Cover expires prior to the regular expiry date because of one reinstatement provision that exhausts the coverage limit by two losses. The Back-up XL Covers are used as additional reinstatement covers during the period that still remains.
BAD DEBTS : Debts that have become impossible to be recovered making these of no value to the creditors are classified as Bad Debts.
BAGGAGE INSURANCE : This insurance coverage is available to the insured or his or her family and provides protection against damage or loss of personal baggage. Such loss can arise through theft, fire, or accidents and cover such instances occurring during the insured’s travel within the country. The policy excludes regular travel from home to office, robbery from unattended cars, articles worn by a person, and loss due to wars. The policies could be modified to suit the needs of individuals by mutual consent. Such modifications must be within the “file and use” guidelines laid down by the IRDA.
BAGGED CARGO WARRANTY : Marine cargo insurance excludes any loss of content from the bags through the seams and natural losses to cargo weight. To ensure appropriate addressing of this issue, the insurers include a warranty within the policies stating Shortage in and damaged baggage shall be calculated through a comparison of bags with similar weight within the same lot that arrive undamaged at the destination and the cover excludes shortage through sound bags.
BAILEE : Any individual legally possessing goods that belong to others. The person is supposed to take care of these goods as taken by the owner. The possessor has insurable interest in these goods and can avail it in his or her name.
BAILMENT : It is a contract that transfers the property from the bailor to the bailee.
BAILOR : Is an individual transferring his or her property to the temporary custody, care, and control of another person while ensuring the ownership is retained with him or her.
BALLAST : It is the material that is used to provide stability to vessels that are carrying no cargo.
BANK BALANCE AS PER BOOKS AND AS PER BANK : Similar to the insurance company entering all bank related transactions in its bank account, the bank maintains a ledger account for recording the transactions related to that company. This is reflected in the pass book and also shown as bank balance on a particular date. The bank account shows balance as per the company accounts as well as the bank books.
BANK CHARGES : Banks levy certain types of charges for operating the banking accounts, such as realization of outstation cheques, initiating and executing fund transfers, return charges for dishonored cheques, and other such transactions. These charges are classified as bank charges in the company’s book through journal entries.
BANK GUARANTEE : Related to the insurance industry, bank guarantee refers to the guarantees executed by banks in favor of the insurers to guarantee the payment of the premium by the insured for certain types of policies within the stipulated time period. According to the Indian laws, all premiums must be physically paid to the insurance company on or before the start of the coverage. According to the Insurance Act and Rules, bank guarantee in favor of the insurer is acceptable only when premium cannot be determined when coverage commences.
BANK RECONCILIATION : The balance according to the bank account in the company’s book must be equal to the amount shown as per the bank. There are certain instances when cheques are deposited and the amount is already added in the company books. In the bank accounts, the cheques are still under clearing showing lesser balance. This is why the insurance company is required to prepare a statement that shows the difference between the two balances and the reasons for the same. This statement that reconciles the bank balance according to the company’s books of account is known as the Bank Reconciliation Statement.
BANK TRANSFERS : A bank transfer entry needs to be recorded when the insurance company transfers money from one bank account to another.
BANKERS INDEMNITY POLICY : This is a specialized policy available for banks and protects the bank against destruction or losses of money and/or securities due to fire, burglary, riot, or terrorism inside or outside the premises caused by employees or other persons. The cover is also available for securities or money lost while in transit, misappropriated funds, or is stolen either due to fraudulent employee practices or negligence. Any financial loss suffered by the banks as a result of altercation or forgery by employees is also covered under this policy. If the bank loses money or goods held in trust because of employee dishonesty or criminal act is also protected through this policy.
BAR CHART : This is a graphical representation of information and highlights the important features of frequency distributions covering different risks and possible consequences.
BAREBOAT CHARTER : This is a certain kind of charter where the person chartering the vessel incurs all the expenses incurred during the period when the charter agreement is valid.
BARGES : These are small vessels used to transmit goods from one port to another. Most of these are used to carry bulk cargo. Some barges are used for transporting cargo from the shore to the ships. These run the risk of capsizing in harsh weather conditions and can either be dumb or power-driven.
BARRATRY : This is a wrongful act willingly committed by the crew or the master to the prejudice of the person chartering the vessel or the owner. Some instances include scuttling of the vessel by the crew, deliberately running aground, or setting the boat on fire. Losses arising due to such acts are covered under Clauses ITC – Hulls and ICC (A).
BASE PREMIUM : This is the amount of premium charged by the direct insurers.
BASIC COMMISSION : This is the commission on a reinsurance proportional treaty. This is always applicable on the written premium of the contract.
BASIC PREMIUM : This is the gross amount charged by the insurance company to the policyholder for providing coverage under the policy.
BASIC RATE : This represents the rate of premium shown in the Rate Guide or the Insurance Company Manual for specific kinds of insurance coverage.
BASIS OF LOSS SETTLEMENT : This is a distinct section inserted within the policy document listing the basis of settling different kinds of claims covered under the policy.
BASIS OF VALUATION CLAUSE : Provision that describes the method to calculate the value of the cargo for the purposes of declaration under marine cargo insurance open coverage and policies. It also relates to the provision found in the conditions associated with fire declaration policies for securities and dealing with the valuation of securities for periodic declaration objectives.
BILL OF EXCHANGE : Non-interest paying written order used for international trading. It binds one party to pay a fixed amount to another party on a specific date in the future. Generally drawn by banks and individuals and are transferable instruments.
BLANKET CONTRACT : Health insurance contract providing benefits like accidental death or dismemberment for all classes of people not identified individually. Primarily used for groups like sport teams, campers, and travel insurance for company personnel
BREACH OF CONDITION : Violation of any terms or conditions that have been agreed upon in the insurance policy document, could result in the coverage being withdrawn in case of severe breach
BROKER : Marketing expert representing property buyers and liability insurance dealing with agents or insurance companies to arrange for coverage required by the clients
BULK CARGO : Cargo that is not packaged and is directly loaded in the vessels’ holds.
BULK CARRIER : Consignor of bulk cargo tendering the cargo for transporting to the consignee
BURGLARY : Unauthorized or unforeseen entries to or exists from the premises covered under the insurance through detetctable and aggressive methods with the primary intent of stealing the contents contained therein
BUSINESS INTERRUPTION INSURANCE : Covers any loss of income resulting from disasters suffered by the businesses. The loss of income may be because of disaster-related closure of the business or the rebuilding procedure after the disasters
BAD FAITH : Insurer’s refusal to pay legitimate claim of policyholder. Can also refer to insurance company’s refusal to process and investigate the claim within a reasonable period of time.
BAILEES CUSTOMERS POLICY : Policy that covers any loss or damage to properties of policyholders irrespective of the bailee’s liability in legal terms
BASIC FORM : Property related insurance policies insuring the dwellings at their actual values along with other structures, fair rentals, personal property, and other certain covers. This policy offers cover against only limited perils
BASIS : Amount that is attributable to any asset for the purpose of income tax. It is used to determine the loss or gain from transfer; and to determine gift value
BENEFIT PERIOD : Time period (generally between 1 and 3 years) during which any major medical benefits are payable on the satisfaction of the deductible. At the end of the benefit period, insured individuals are required to satisfy new deductibles to continue enjoying new benefit period
BENEFITS : This is the amount that the insurance company will have to pay claimants, assignees, or beneficiaries under each kind of policy
BINDER : Written or oral contract that has been temporarily issued for placing the insurance in force when the possibility of issuing new policy or endorse the existing cover is non existent. The binder is subject to the terms and conditions of the policy and the premium amount
BINDING RECEIPT : A receipt provided for payment of the premium and accompanies the insurance application. When the policy is approved, it binds the insurer for making the policy effective from the date on this receipt
BLACKOUT PERIOD : This is the time when social security benefits are unavailable to the surviving spouse; the period between the sixtieth birthday of the widow and the youngest child attaining the age of sixteen
BLANKET MEDICAL EXPENSE : It is a provision that entitles insured persons to collect the maximum amount towards the coverage of hospital and medical expenses included under the policy. This is without any limitation on the types of individual medical expenses
BLUE CROSS : This is an independent not-for-profit membership organization offering protection on service basis against expenses incurred towards hospital care within limited geographies
BOAT OWNERS PACKAGE POLICY : Special policy package for owners of boats combining physical damage insurance, liability insurance, medical cost insurance, and other covers within one single contract
BOILER AND MACHINERY INSURANCE : Covers loss arising from the operations of pressure, electrical, and mechanical equipment. The policy covers the loss to the boiler or machinery, business interruption loss, and property damages
BOND : Government issued certificate or corporate certificate available as evidence of debt. Issuer promises to pay the holder specific interest during a particular period and repay the entire loan amount on maturity
BOOK OF BUSINESS : It is the size, number, and type of accounts owned by a particular agent
BOOK VALUE : The purchasing cost after deducting depreciation
BORDEREAU : Itemized transaction statement (in spreadsheet format) used in reinsurance
BRANCH OFFICE SYSTEM : The life insurance marketing system where multiple offices are established in different locations. Branch managers hired by the insurance company are responsible for training and hiring new recruits
BREAK IN SERVICE : Any calendar year, plan year, or 12 consecutive month period in which a participant is unable to complete over 500 service hours
BROAD FORM : Property insurance covering the dwelling and other structures at their replacement costs. Provides additional coverage with greater list of possible perils
BURGLARY AND THEFT INSURANCE : Insurance cover provided for property losses arising from robbery, burglary, or larceny
BUSINESS INCOME EXPOSURE : Profits lost due to property damages resulting in halting the business
BUSINESS INSURANCE : Insurance policy providing different benefits to businesses and is issued for indemnification of businesses for any loss of services due to disability of key employee or partner
BUSINESS INTERRUPTION INSURANCE : Losses arising due to temporary halting and shutdown of business due to fire or other insured perils. Insurer provides reimbursement of profits and continuing expenditure
BUSINESS LIFE INSURANCE : Life insurance availed by a business on the life of any member of the company. Often availed by partnerships to protect surviving partners against possible loss arising due to demise of partner or by companies for reimbursing the loss caused by death of any key personnel
BUY-SELL AGREEMENT : Agreement between business owners for purchasing the shares of deceased or disabled owner. Value of each owner’s share and the specific terms guiding the buy – sell process is established prior to death or disability
BASIC COVERAGE FORM : Commercial or personal insurance property forms providing basic covers. Generally offer the most limited kinds of coverage surpassed by terms like “special forms” or “broad forms”
BENEFICIARY : Person/s or entity/ies named in the insurance policy as the recipient of the proceeds in the event of the demise of the insured
BENEFIT OF INSURANCE CLAUSE : A term in the policy document under which the bailee of goods claims benefits through an insurance policy procured by the owner on the goods under the care of such bailee. Any such clause included in contract of carriage that has been issued according to the Carriage of Goods Sea Act is not legally valid
BLANKET INSURANCE : A health insurance contract covering all classes of people not identifiable individually. Also refers to property liability insurance policies covering single property type at one location under one policy instead of separate items or can be for multiple kinds of properties located in various locations
BODILY INJURY LIABILITY : Liability arising from injury or death of another person
BOILER AND MACHINERY POLICY : Protection against any loss arising due to accidents related to the pressure vessels, boilers, and other kind of machinery inclsuive of the equipment. Also covers liability arising due to such accidents
BUILDER’S RISK COVERAGE FORM : Commercial property coverage form specially created for buildings under construction
BUILDER’S RISK INSURANCE : Insurance protection against any losses to the buildings or structures that are still under construction
BUILDINGS AND PERSONAL PROPERTY COVERAGE FORM : Commercial property coverage form for insuring most kinds of commerical premises (includes building as well the contents inside). Commonly used kind of insurance replacing other options like Special Personal Property Form, General Property Form, and Special Building Form
BUSINESS AUTO COVERAGE FORM : Latest insurance coverage for commercial automobiles written as monoline policy or a component of the commercial package. It has legally replaced the old Business Auto Policy
BUSINESS INCOME COVERAGE FORM : Form related to commerical property coverage offering protection against indirect losses due to damage to the property, which can include incurring additional expenses or loss of income due to such damage. Replacement for Business Interruption and Extra Expenses forms
BUSINESS LIABILITY : Describes liability covers provided under the Business Owners Liability Coverage Form. Includes bodily injuries, fire damages, property damages, advertising, and personal injuries
BUSINESS PERSONAL PROPERTY : Conventionally, these are known as “contents” business personal property includes machinery, equipment, furniture, materials, fixtures, and other owner’s properties used for the business
Glossary on General Insurance Terms starting with D
D.A.F. (DELIVERY AT FRONT) : Contract term whereby sellers undertake goods delivery at predetermined location or point at the border of two countries
D.D.P. (DELIVERY DUTY PAID) : Contractual term under which the sellers agree to deliver goods at the destination within the country and pay the customs duty
D.D.U. (DELIVERY DUTY UNPAID) : Sale contract where seller agrees to deliver goods at the prespecified destination in the country of the buyer; however, the duty must be paid by the purchaser
D.E.F. (DELIVERY EX SHIP) : Seller is responsible for arranging shipment of goods to the destination port as well as incur the costs and risks until delivery to the said destination
D.E.Q. (DELIVERY EX QUAY) : Similar to the DEF contract; with an additional responsibility of the seller to ensure goods are placed at quay
DACOITY : Robbery by group of people; the Standard Burglary Insurance Policy offered to businesses and dwellings cover any losses arising due to dacoity
DAMAGE BY HOOKS, MUD, OIL OR OTHER EXTRANEOUS SUBSTANCES. : Marine insurance policy extensions for group of extraneous perils; subject to related causes through payment of higher premium; losses categorized under this head include damages resulting from contamination through extraneous materials, oil, hook, or mud
DAMAGES : Monetary compensation provided at law for any civil wrongdoing or breach of a contract
DATE OF ISSUE : Date of issue of the insurance plan; provides evidence of coverage being offered by insurer to the insured
DCDRF : District Consumer Disputes Redressal Forum; complaints against insurance companies for deficiency in services filed by the insured in the district forums where compensation claims are not over INR 5 lacs; district forums can have jurisdication on one or multiple districts
DEAD WELL : Any well that ceases to produce gas or oil either permanently or temporarily
DEADFREIGHT : Space booked on the ship but not used by the party still entails payment of freight charges known as deadfreight; right to these charges can be exercised by the vessel owner under certain charter parties
DEADWEIGHT : Maximum weight in tons available for cargo, crew, water, fuel, and other stores combined together that can be carried by the vessel when loaded to its loadline level
DEALER : An authorized agent of manufacturers responsible for sales of manufactured vehicles or goods
DEATH : End of life due to accident; to claim compensation under these circumstances covered under the insurance contract requires the beneficiary to produce death certificate issued by the authorities; sometimes post-mortem certificate may also be required
DEATH BENEFIT : Payment made to nominee or legal heir of the insured within the Personal Accident Insurance plan on the demise of the holder
DEATH CLAIM : Any claim lodged within the insurance policy by the beneficiary on the death of the insured individual
DEBENTURE : Bond backed by general credit of the issuer; no property is specifically pledged as security for the bond
DEBENTURES -CONVERTIBLE / NON-CONVERTIBLE : Debentures issued with an understanding that on expiry of a certain predetermined period, the bonds will be converted to equity at a specified price or as per a formula are convertible debentures; debentures without such clause of conversion is specified, these are non-convertible bonds
DEBENTURES – OPTIONALLLY CONVERTIBLE : Companies can issue debentures that can be converted to equity shares by the holders at the end of a specified period at an agreed price; in case the option is not used by the holders the debentures are redeemed on the specified date
DEBENTURES – PROJECT : Monies raised by companies through issue of debentures for capital expenditure or setting up new project; duration of the bonds is long-term comprising the construction period as well as the additional time needed to earn profits through the project where debentures can be redeemed; project debentures are often appraised by financial institutions
DEBENTURES – RATED OR UNRATED : Debentures often receive ratings from agencies like CRISIL or ICRA; ratings depend on capability of the issuer to redeem tbe debentures on the due date and its capability to pay interest when due; ratings vary from AAA to BBB; IRDA norms require debentures rating to be at least AA that may be lowered to A+ under certain conditions
DEBENTURES- SECURED : Debentures are charged against the security of assets of the issuing company
DEBENTURES -UNSECURED : Debentures are issued without any collateral by the issuer
DEBENTURES -WORKING CAPITAL : Companies may raise money through issue of debentures used for working capital; commonly these are of short durations (oe or two years); could be secured or unsecured
DEBIT AND CREDIT BALANCES : Entries that are passed are balanceable; when debit items value is higher account shows debit balance and vice versa
DEBRIS REMOVAL CLAUSE : Clause attached to standard fire and special risks cover that entails higher premium offers additional coverage greater than the limits prescribed in the standard insurance document; agreement between the insured and the insurer for costs and expenses necessarily incurred by the policy holder for removing debris due to any accident
DEBT SERVICE : Required cash during a period (often one year) towards interest payment and principal repayment for current maturities on outstanding debt obligations; project funders require project owners to procure insurance for debt servicing in case there is delay to commence the project due to accidental damage to the materials
DECEPTIVE PRACTICE : Hiding of the actual facts; either the agent or insurance company giving an impression to prospective insured of certain cover being available in the policy while such cover is not written in the insurance contract
DECISION SUPPORT SYSTEM : Component of the management information system providing answer to issues and integrating the decision maker as part of the system
DECISION TREE : Illustrative diagram showing the various possible consequences of different decisions during different stages of the decision making process
DECK CARGO : The cargo carried by the ship on its deck; cargo insurance is commonly available for goods being carried under deck unless the policy document clearly states the cover being available for goods being shipped on deck
DECLARATION : Statements within the insurance contract providing information related to the life or property that is to be insured and used to underwrite and rate and identify the property or life that needs to be covered
DECLARATION CLAUSE : Clause found in marine cargo open cover or open policy; provides all the dispatches within the purview of open cover or policy needs to be declared without any exception irrespective of arrival or not
DECLINATURE : Refusal by the insurance company for acceptance of proposed risk or for renewal of an existing policy
DEDUCTIBLE : Proportion of loss borne by the insured towards any claim; two forms; amount of excess is mentioned as fixed amount or percent of sum assured or amount of the claim and time excess under which the insured is not entitled to any claim during the stated period found within the policy document
DEDUCTIBLE, PERIOD : Applicable deductible related to every claim expressed as the number of days relating to which it will not be payable under the insurance contract
DEFEASIBLE INTEREST : Relevant to marine adventure; interest may be discontinued once the travel has commenced; for example importer insuring cargo pruchased from overseas seller although he is entitled in case seller is guilty of default or delay for rejecting goods or treat at sellers’ risks
DEFENDANT : Either of the parties found negligent in law suits from whom the other party tries to procure relief for certain wrongs to the latter being committed by the former
DEFENSE COSTS : Expenses and costs incurred by defendants in legal suits connected to defending the filed case against her or him by the plaintiff
DANGEROUS OR HAZARDOUS GOODS : Liquids, soilds, or gases that can be harmful to the environment, human beings, other living organisms, or property; often subject to chemical regulations
DEPRECIATION : Allowance for reduction in value of property due to deterioration, damage, wear and tear, or obsolescence; expressed as percent of the sound value of the property
DIRECTORS’ AND OFFICERS’ LIABILITY : Personal liability cover for directors and officers because of wrongful acts in their managerial capacities; costs of defending these are also covered and can be paid before final judgement; acts as protection for any claim brought against company’s directors or officers for alleged or actual neglect of duties, errors, or misstatements while in their management position
DISABILITY : Any condition curtailing to an extent an individual’s capability to carry on her or his normal tasks; could be temporary or permanent; or partial or complete disability
DISMEMBERMENT : Includes loss of being able to use certain predefined bodily parts; including eyes and limbs due to an accident
DISMEMBERMENT INSURANCE : Compensation paid in the event the insured suffers from loss of eyesight or use of his or her limbs in an accident
DOMICILIARY HOSPITALIZATION : Treatment of patient who has been sent home because of lack of accommodation at the hospital or when the patient is not in a condition to be moved to a hospital; made possible by the recommendation of the doctor or treating physician and determined on the base of the case merit
DAMAGE TO PROPERTY OF OTHERS : Damages covered to a predetermined amount per occurrence on behalf of the insured damaging property of others; payment is payable inspite of lack of legal liability; such cover is included within the contract made for the homeowners policy
DECLARATIONS : Various statements within the insurance plan providing information about the life or property being insured or used for the purpose of underwriting and rating requirements and for identifying the life or property to be covered
DECLINATION : Insurance company’s refusal for providing insurance to an individual after carefully evaluating the application and other related factors
DEFERRED ANNUITY : Annuity providing towards the income payments for beginning at a future specified date
DEFERRED COMPENSATION : Arrangements through which compensation for employees for current and past services is delayed to a future date
DEFERRED GROUP ANNUITY : Kind of group annuity offering for purchasing each year of paid-up capital deferred annuity for each group member; total amount being receivable by member at the time of retirement being the amount of deferred annuities
DEFINED BENEFIT PLAN : Pension policy stating either benefits receivable by the employees on retirement; or technique used to determine these benefits; employer contribution are determined actuarially
DEFINED CONTRIBUTION PLAN : Plan under which contribution rate is fixed and the receivable benefits by the employees on retirement depending on an extent on their earning and contribution
DENTAL INSURANCE : Group or individual plan helping the payment of normal dental service costs as well as the damage to teeth due to an accident
DEMUTUALIZATION : Procedure to modify the legal structure of the insurance service provider through mutual form of ownership to stock kind of ownership company
DEPENDENCY PERIOD : Time period following the readjustment whereby the surviving partner’s children are below eighteen years and dependant on the parents
DEPENDENT BENEFITS : Social security benefits that are available to children or spouse of the beneficiaries
DEPOSIT ADMINISTRATION GROUP ANNUITY : Group annuity plan offering accumulation of the contributions within an undivided fund from which the annuities purchased are as individual members of group retirement
DEPOSIT PREMIUM : Deposited premium paid by the potential holder at the time of application to avail insurance cover; usually equals minimum of first month’s estimated premium amount and is applicable toward the actual premium at the time of billing
DEPOSIT TERM INSURANCE : Kind of term insurance cover not involving deposit wherein first year premium is significantly higher than premiums for other years; endowment payable at the end of term period; in some instances partial endowment is applicable for purchasing new term plan or whole life insurance
DIAGNOSIS-RELATED GROUPS (DRGS) : System used for reimbursement of health care service providers fixed sums for the care delivered related to standard diagnostic categories
DIFFERENCE IN CONDITIONS INSURANCE (DIC) : An all risks covering other perils that are not covered under the basic property insurance plans; supplemental to and exclusive of the coverage provided through underlying contractual agreements
DIRECT LOSS : Financial losses resulting from directly insured risks
DIRECT PLACEMENT : Selling an entire issue of stocks or bonds by the issuer to one or several large financial institutions like insurance companies without marketing the issue publicly
DIRECT PREMIUMS WRITTEN : Casualty and property insurance written premiums (lower return premiums) without providing for any allowance for the premiums towards ceded or assumed reinsurance
DIRECT RESPONSE SYSTEM : Marketing technique whereby insurance is sold without seeking services from agents; prospective buyers are solicited through advertisment in newspapers, mail, magazines, radio, TV, and other media
DIRECT WRITER : Industry term for companies that use in-house sales personnel for writing policies; sometimes refering to companies that contract through exclusive agents
DISABILITY BENEFIT : Periodic payments (often monthly) paid to the participants under certain retirement plans; when these participants are eligible to receive the benefits and are totally or partially disabled before the regular date of retirement
DISABILITY INCOME INSURANCE : Any form of health insurance providing periodic payments for replacing the income when insured individual is unable to work as a result of illness, disease, or injury
DISABILITY INSURED : Status of any individual insured for receiving disability benefits under Old Age, Survivors and Disability Insurance program; covered individual should be completely insured and have at least 20 quarters of such coverage during the last 40 quarters ending in the quarter when disability occurs; these quarterly requirements reduce for individuals who are below the age of 30
DISAPPEARING DEDUCTIBLE : Deductible within the insurance plans providing reducing deductible amounts as the losses increase in size; whereby smaller claims are not reimbursement but larger losses are fully compensated
DISPOSABLE PERSONAL INCOME : Personal income after the payment of personal tax and non-tax payments; income available for the individuals for savings and expenditure
DIVERSIFIABLE RISK : Any risk that is eliminated by investors through diversified portfolios
DIVIDEND : Return of partial premium within participating insurance reflecting difference between charged premium and combination of mortality, investment experience, and expense; these premiums are calculated for providing margins over the anticipated cost of procuring insurance protection
DIVIDEND ADDITION : Sum of paid-up insurance acquired with a policy dividend and included in the face amount of the insurance plan
DOCTRINE OF REASONABLE EXPECTATIONS : Legal doctrine holding policies to be interpreted as per the tenet of an individual without any legal training would interpret the same
DOLLAR THRESHOLD : Within no-fault vehicle insurance stating the dollar threshold; preventing individuals from suing in torts for recovering pain and suffering unless medical expenditures is greater than specified amount
DOMESTIC INSURER : Insurance company that is domestic within the state of its incorporation
DONOR : Person who makes a gift
DOUBLE INDEMNITY : Provision in the policy usually assoicated with demise doubling the payment of designated benefits in case of the occurrence of certain types of accidents
DRAMSHOP LAW : Legal provision imputing negligence to the owners of any business selling liquor in the event an intoxicated person causes damage to the property or injuries to another individual; usually exclusion under general liability insurance plan
DREAD DISEASE INSURANCE : Insurance cover offering unallocated benefits subject to a maximum amount towards expenditure incurred related with the treatment of certain kinds of diseases like spinal meningitis, poliomyelitis, cancer, and encephalitis
DRIVER EDUCATION CREDIT : Students discounts or decrease in the premium amount for younger drivers becoming eligible after the completion of driver education training
DUPLICATION OF BENEFITS : Identical or overlapping coverage of same covered under two or more health insurance plans; usually result of contracts with different insurance companies, service providers, or prepayment plans referred to as multiple coverage
DWELLING PROPERTY 1 : Property cover insuring the dwelling at the actual cash value, other structures and personal property at fair rental value and other kinds of coverages; provides protection against limited number of risks
DWELLING PROPERTY 2 : Property insurance insuring dwelling and other structures at their replacement costs; adds additional protection covering more risks when compared to Dwelling Property 1
DWELLING PROPERTY 3 : Kind of property plan that covers the dwelling and other structures from direct physical damage from any kind of risk except those that are excluded; personal property coverage is on the basis of named risks
DECLARATION PAGE : Page in the insurance contract listing the name of the company, its address, policyholder name, start and end dates of the coverage, and acutal covers provided within the contract, which includes amount and location
DIRECT OR HELD COVERED : Condition requiring the insured voyage be directly from one location to another; in case the travel is delayed en route or deviated from direct insured route insurance cover can be extended by payment of additional premium only when the insured person provides prompt notice on receiving such advice unless otherwise specified in the insurance contract
DISABILITY INSURANCE : Kind of health plan paying monthly income to the insured person when s/he is unable to work due to an accident or sickness
DISCLOSURE : Duty of the insured individual and his/her broker to provide the underwriter details on all material events prior to acceptance of the risks
DISCOVERY PERIOD : Time allowed by the insured post termination of specific bond and policy provisions for discovering that s/he has actually sustained any loss that has occurred during the period covered by the insurance contract
DUTY OF ASSURED CLAUSE : Appearing in the Institute Cargo Clauses printed for using with the MAR kind of insurance plan; directs the insured’s attention, his brokers, etc. towards the duty for taking reasonable steps for averting or minimizing losses recoverable under the insurance policy; also for ensuring all rights against the carriers and others are adequately exercised and preserved; underwriters agree for reimbursing the insured for reasonable expenses incurred due to compliance with the clause known as “sue and labor” charges
Glossary on General Insurance Terms starting with E
ECONOMIC LIMIT IN INCREASED COST OF WORKING : Maximum limit to which the insurance company will pay under fire consequential loss policy towards additional cost of working incurred by the insured for avoidance of partial or total decrease in turnover during the period of indemnity; economic limit is the gross profit that is saved through incurring the additional working cost
E & O.E. : Errors and omissions that are excepted
EACH AND EVERY LOSS : Excessive Loss Reinsurance arranged on the “Any one event” basis, which every loss arising due to the single event is accumulated and extra recovery effected towards accumulation of such losses in excess of the underlying loss retention of the reinsured; any event of loss defined as 168 consecutive hours and each & every loss during this period is aggregated as stated for the application of EL recovery
EACH AND EVERY RISK EACH AND EVERY LOSS : Related to treaty reinsurance; agreement providing reinsured to determine what one risk is (example one building or group of buildings under a single roof) and what one loss entails (having limits on geographical scope or period for the loss occurrence)
EARNED PREMIUM : The component of the premium related to property of an insurance service provider depending on the expired portion of the plan during the period; an insurance company is assumed to earn 75% of annual premium 9 months have elapsed on an annual policy
EARNED PREMIUM – REINSURANCE : Premium ceded and included during the year in question along with the reserve for the unexpired risk carried forward or portfolio premium entry after reducing reserve for unexpired risks at the completion of the current year or withdrawn portfolio premium
EARTHQUAKE FIRE AND SHOCK : Extension of the policy coverage to the standard fire and special perils plan by paying an additional premium; damage or loss occuring to the insured property due to fire or shock or both due to earthquake is covered within such extension
EARTHQUAKE ZONE : Differentiating between areas that are prone to earthquakes and those locations that are not prone to this phenomenon; offering different rating structures for earthquake-prone locations for procuring coverage under Fire Policy; Tariff Advisory Committee divides the country in 4 zones; details are available in the Fire Tariff
ECONOMIC LIFE : The remaining duration when the property or equipment yields higher returns than the cost of its maintenance and operations; it is an important consideration used for the determination of the market value while availing insurance coverage
ECONOMIC LOSS : Estimated loss (insured as well as uninsured) incurred by a person, family, or business resulting from accident or mishaps like automobile accidents, personal or work accidents, or fires; inclusive of factors like funeral costs, hospital, medical, and legal expenses, property damages, income loss, as well as third party liability
ECONOMICALLY VULNERABLE OR BACKWARD CLASSES : According to the IRDA guidelines, people who live below the poverty line
EFFECTIVE DATE : Actual date on which insurance coverage comes into force
EFFICIENT LEVEL OF RISK : Amount of risk balance after business or individual pursues activities like internal risk decrease, loss control, or loss financing to an extent where the marginal benefits are equivalent to the marginal costs
EIGHT SYSTEM : System adopted in the reinsurance business related to the Premium Portfolio Adjustment to ascertain unexpired risk liabilities; policies that are issued during the previous 12 months segregated in 8 blocks of one and half month each; unexpired premium is computed through the unepxired risk within each block
EJUSDEM GENERIS : Implies of the same type; where general words are followed by specific words having common quality, the general words are considered to merely refer to things of the same type; when policy contract mentions specific list of perils and the list ends with words like “all other perils” this expression is subjected to legal principles of ejusdem generis and implies only similar perils to the earlier specified perils
ELECTRICAL CLAUSE : Clause appearing as component of the General Exclusions within the Standard Perils Policy that relieves the insurance company from the liability of any loss or damage occuring due to electrical and/or electronic equipment or the installation resulting from arcing, over-running, electricity leaks, excessive pressure short circuiting, or self heating; the damages to adjacent insured items consequent to such causes is covered under the policy
ELECTRONIC EQUIPMENT INSURANCE : Insurance policy providing coverage from sudden unforeseen material damages to electronic equipment for any reason subject to some exclusions; broadly covers fire and allied risks, machine breakdown, explosion, short circuit, or other causes burglary, lack of skill, theft, entry of foreign bodies, humidity, gross negligence, water damage, faulty operations, et.; policy also extends to cover loss or damage to external data media as well as cost incurred for reconstruction of the data; further coverage provided for additional expense incurred due to failure of the electronic system making it necessary to substitute with another system
EMBARGO : Government prohition (either due to economic or political reasons) towards shipment of cargo and vessel movement
EMBEZZLEMENT : Fraudulent misappropriation or usage of another individual’s property or money that has been entrusted to another’s care
EML UNDERWRITING : Used in relation to Engineering Reinsurance whereby the ceding company’s retention and treaty reinsurer’s share is assessed as a percent of the Estimated maximum loss arising from one event
EMPLOYEE (BBI INS.) : Means all existing personnel (clerks, officers, and other sub-staff) either temporary or permanent, full or part time, contract basis or otherwise, and includes apprentices on the payroll of the company at all offices but excludes directors or partners who are not salaried
EMPLOYER FORM : Related to Fidelity Guarantee Insurance; form that must be completed by the employer (insured) that is in the nature of proposal form and is the basis of the insurance contract; seeks information about employer, nature of duties of the employee who is guaranteed, system of checks within the company, past defalcation (if any) by the employee, etc. in the end insured makes declaration that certifies truthfulness of the statements
EMPLOYMENT AND STUDY POLICY : Special policy for Indian citizens who temporarily are posted abroad in sedentary non-manual jobs or students pursuing studies or conducting research in foreign countries; cover has limits with relation to the age of person to be covered and the liability of the insurer; cover is available under 2 plans; worldwide exclusing the USA and Canada, and worldwide including Canada and USA
ENDORSEMENT : Memorandum issued towards effecting additions, deletions, or alterations in the coverage granted under the standard policies either when issued, or at the commencement period, or any other time during its validity through mutual agreement between the insurer and insured; is signed by authorized signatory of the insurance company and on issuance the policy and endorsement together include the contractual evidence
ENERGY INSURANCE PACKAGE POLICY : Risk cover against oil and energy risks covered under 5 sections; (1) well control expenses (2) property insurance cover for all off-shore properties comprising multipurpose support ships, platform, drill ships and barges, pipelines, cargo, materials on-board rigs, and seismic and other vessels, coverage available for strike or war risks (3) terrorism coverage for all interruptions (4) property insurance cover for on-shore property including drill equipment and land drills (5) third party liability comprising marine and specified offshore liabilities; because of the complexities of these risks and significant reinsurance needs, this coverage is finalized under direct involvement of reinsurers from the commencement and cover granted is as per the international standards
ENERGY TREATY : Reinsurance treaty related to off-shore drilling rig platforms in any oil field within the deep seas pipelines used for supply of oil to onshore refineries and units, which are defined as the Marine Hull Offshore Business
ENTREPOT TRADE : Import of goods for use of immediately re-exporting these to another nation; such cargo does not entail payment of customs duty
ENVIRONMENT : The National Environment Tribunal Act 1995 definition includes land, water, and air as well as the inter-relationships existing between land, water, and air and human beings along with other living things like microorganisms, plants, and property
ENVIRONMENT (PROTECTION) ACT 1986 : Comprehensive umbrella legislation towards the enforcement of measures to protect the environment and coordinating of the activities of the State and National Pollution Control Boards constituted under the Air and Water Acts
ENVIRONMENT RELIEF FUND : Fund founded according to the provisions of the Public Liability Insurance Act 1961; the funds are used to pay relief under awards offered by the Collector within the provisions of the said Act and is used for meeting excessive amount paid under the insurance plan
ENVIRONMENTAL DAMAGE : Injurious presence on or in land, atmosphere, or water course or body, solid, gaseous, thermal, or liquid contaminants, pollutants, or irritants
ENVIRONMENTAL IMPAIRMENT LIABILITY INSURANCE : Cover for liabilities and losses resulting from damage caused to the property due to pollution
ENVIRONMENTAL POLLUTANT : Any liquid, solid, or gaseous substance found in such concentration that causes or may cause environmental injuries
ENVIRONMENTAL POLLUTION : Presence of any environmental pollutant in the environment
ENVIRONMENTAL RISKS : Risks that relate to the release of contaminants in the air and disposal of industrial wastage in water or on land
EQUIPMENT LEASING : Purchasing and leasing of equipment; owner earns through lease rentals as well as has tax benefits; policies for leased properties is issued in the owner’s name with the leasee’s interest being noted in the policy document if required by both parties
EQUITABLE INTEREST : Interest that is recognized legally
ERECTION ALL RISKS INSURANCE : Insurance plan for covering projects that are under construction; provides coverage to all machinery and materials from all kinds of risks, subject to some predefined exclusions; cover is extended for inclusion of civil engineering works related to the project, surrounding property of the insured, and third party liabilities; policy commences on arrival of the first consigment of materials at the location of the site and continues until construction and testing is completed and project commissioning; sum insured represents estimated value of completed project; suitable coverage amounts need to be opted for by the insured for adjoining property and third party liabilities; policy is governed by the Tariff
ERROR, OMISSION & ALTERATION CLAUSE : Clause within proportional treaty wordings that provide accidental or inadvertent errors or omissions not prejudicing the treaty and these are to be corrected at the earliest and all required adjustments are to be made
EMBEZZLEMENT : Fraudulently using or taking property or money belonging to another person and has been entrusted to one’s care
EXCESS AND SURPLUS INSURANCE : Insurance available for covering losses above a specific amount and losses below this amount being covered under standard policy; insurance coverage for unusual or one-time perils that are not covered within the normal policies available in the market
EXCLUSIONS : Specific circumstances or conditions listed within the policy document for which the plan does not provide any benefits or payments
EARNED PREMIUM : Part of the complete casualty or property plan premium applicable to the portion of the expired period
EFFECTIVE DATE : Date on which the coverage under the insurance policy commences
ENDORSEMENT : Amendment to the policy contract through a rider or rubber stamp
EARLY RETIREMENT : Retirement of the participant at a date earlier than the regular retirement date; often at reduced annuity amount; early retirement allowable during any time 5 to 10 years prior to the regular retirement date
EARNED INCOME : Employment income earned as salary, wages, fees, or commissions
EARNINGS TEST (RETIREMENT TEST) : Determining the amount of social security benefits that are available to beneficiaries after making the necessary adjustments to their earnings
ECONOMIC POLICY : Special kind of participating whole life plan under which the dividends are used for purchasing term plan or paid-up additions equivalent to difference between face amount of the insurance policy and certain guaranteed amount
ELEMENTS OF A NEGLIGENT ACT : The 4 elements injured persons need to show as evidence; existence of legal duty for using reasonable care; failure to perform such duty, injury or damage to the claimant, and proximate cause relation between infliction of damages and negligence
ELIGIBILITY DATE : Date on which individual member within a specified group is eligible for applying for insurance under the group health or life insurance plan
ELIGIBILITY PERIOD : Specified length of time (often 31 days) following the eligibility date during when the individual member of particular group continues to remain eligible to avail cover under the group plan without providing proof of insurability
ELIGIBILITY REQUIREMENTS : Conditions that the employee must satisfy for participating in the retirement plan (one condition being completion of 1 to 3 years of service and second being attaining the age of 25); conditions whereby the employee is required to satisfy to obtain the retirement benefit (attaining 65 years of age or completing 15 years of service)
ELIGIBLE EMPLOYEES : Members within the group meeting the eligibility requirements under the group health or life insurance policy
ELIMINATION PERIOD : Period of time between the commencement of the disability income insurance coverage and diasbility period when no benefits are payable
EMPLOYEE DISHONESTY COVERAGE FORM : Commercial crime insurance form that is drafted by Insurance Services Office covering monetary loss, securities, and other insured properties due to dishonest act by the employee/s covered under the plan
EMPLOYEE RETIREMENT INCOME SECURITY ACT (ERISA) : Legislation passed in the year 1974 that is applicable to most of the private pension and welfare plans requiring minimum standards for protecting the participating employees
EMPLOYMENT STOCK OWNERSHIP PLAN (ESOP) : Defined contributions pension plans that are designed for investing primarily in employee stocks
ENDORSEMENTS : Additional paper (not part of the original insurance contract) that cites certain terms and is attached to the original document becoming a legal part of the contractual agreement
ENDOWMENT : Life insurance that is payable to the policyholder/s if alive on the maturity date stated in the policy document or to the beneficiary if the insured passes away before the maturity date
ENROLLED ACTUARY : Individual performing acturial services for insurance plan and is enrolled with the Federal Joint Board for Enrollment of Actuaries
ENROLLMENT CARD : Document signed by any employee as notice of her or his desire to participate in the benefits of any group insurance program
ENTIRE CONTRACT CLAUSE : Provision within the Life Insurance policies that state the policy and attached application constitute complete contract between the parties; entity purchase agreement specifies the terms for business to buy back the share of the deceased owner in the business
EQUITIES : Investments made in the form of ownership of property generally common stock as differentiated from the fixed income securities like mortgage or bonds
EQUITY IN THE UNEARNED PREMIUM RESERVE : The amount through which any unearned premium reserve is over-stated because it is determined on the basis of gross premium instead of the net premium
ERRORS AND OMISSIONS INSURANCE : Liability insurance plan providing protection against any losses incurred by clients due to negligent acts, errors, or omissions of the insured
ESTATE : All the assets and liabilities of a deceased individual
ESTATE PLANNING : Development of the plan for transfering all the property from one generation to the next or within the same generation
ESTOPPEL : Law that prevents any individual from denying the truth of a previously represented fact especially when this kind of representation is used by another person to rely on the statements made
EVIDENCE OF INSURABILITY : Any statement of evidence related to the physical condition of an individual and/or other factual details affecting her or his acceptance for availing the insurance
EXCLUSIVE AGENT : An agent hired by only one insurance service provider soliciting business only on behalf of the company
EXCLUSIVE REMEDY DOCTRINE : Doctrine within workers compensation plan stating that workers compensation benefits will be the sole and exclusive form of recovery for workers who are injured on the job or suffer from work-related sickness; this doctrine has been eroded through several legal decisions
EXCLUSION OR EXCEPTION : Conditions or circumstances that are specified in the insurance contract under which the insurance policy will not offer the benefits
EXCLUSION RATIO : Portion of the annuity payment that is considered by taxation laws to be a return on the insured’s initial investment and is not subject to income tax at the time of receipt
EXCLUSIVE PROVIDER ORGANIZATION (EPO) : Individuals belonging to an EPO receive care from affiliated providers; any service availed from unaffiliated providers is not reimbursed
EXPECTED CLAIM COST : Expected value of the losses being distributed for particular group of the insurance plans
EXPECTED VALUE : Total sum of losses that are divided by the number of exposures; which implies the average
EXPENSE LOADING : Amount that should be added to the pure premium amount towards expenditures, profits, and margin for possible contingencies
EXPENSE RATIO : Ratio of an insurance company’s operating expenses with relation to the premiums
EXPERIENCE : Relatioship (expressed as a ratio or percent) of the premium to the claims under an insurance plan, benefits for any stated time, or benefits
EXPERIENCE MODIFICATION FACTOR : Related to workers compensation rating used for reflecting degree to which any particular employer has experience that is better or worse than expected for the industry; weighted by the credibility factor of the employer
EXPERIENCE RATING : Procedure used to determine premium rates for group risk, either partially or wholly based on the experience of the group
EXPERIENCE REFUND : Provision within group plans for calculating returns of premium to the holder due to lower than estimated claims; additional period post expiration of the policy during which any valid claim will be paid under the claims-made policy of liability plan
EXTENDED REPORTING PERIOD ENDORSEMENT : Added to the claims-made liability insurance plan for providing additional time during which all valid claims will be paid
EXTENDED TERM INSURANCE : Any form of insurance that is available as non-forfeiture option; provides original amount of insurance for a limited time period
EXTENDED UNEMPLOYMENT INSURANCE BENEFIT : Extra cash benefits paid by the federal-state umemployment insurance plans for workers who are unemployed unvoluntarily and have exhausted all the regular weekly benefits available to them during these longer unemployment periods
EXTORTION : Surrendering of property away from the premises due to threat of bodily harm to the insured, relatives, or invitees being held as captive
EXTRA EXPENSE INSURANCE : Kind of insurance income covering additional expenses incurred for continuing the operations after the occurrence of any loss
ELECTRONIC DATA PROCESSING COVERAGE (EDP) : Special kind of insurance available to cover computer equipment, information storage media, data systems, and income loss or expenses incurred to EDP losses
EMPLOYERS LIABILITY INSURANCE : Cover against common law liability of employers for accidents to the employees, which are different from liabilities arising from workers compensation laws
EMPLOYERS NON-OWNERSHIP AUTOMOBILE LIABILITY : Liabilities arising from the operations of automobiles not owned by the insured often occurs when any employee uses her or his personal car for conducting the insured’s business activity; insurance coverage available to cover liabilities arising from such circumstances
ENGLISH JURISDICTION CLAUSE : Any condition printed in the MAR form whereby the underwriter agrees to recognize judgements only from courts convened under the English laws; subscribing underwriters may agree for replacing this clause with foreign jurisdiction laws clause
ENGLISH LAW AND PRACTICE : Clause appearing in Institute clauses published for using in the MAR form; applicable when foreign jurisdiction clause is attached to the plan and requires foreign court to base its decision on the basis of English law and practice
EXPOSURE : State when being subject to possible liability due to loss; risk extent as determined by payroll, area, gate receipts, etc; possible loss due to risk caused to the surroundings
EXTENDED COVERAGE ENDORSEMENT : Specific endorsement attached to standard fire policy providing cover due to wind storms, explosion, hail, vehicular damage, riot, smoke, riot due to civil strikes, civil commotion, or aircraft
EXTENDED REPORTING PERIOD (ERP) : Period of time allowed for making claims post the expiration of “claims-made” policy; also referred to as “tail”
Glossary on General Insurance Terms starting with F
F.A.S. (FREE ALONGSIDE SHIP) : Term within the sale contract under which the seller is responsible for placing the goods on the quay along the vessel until when the cargo is seller’s responsibility; transport cost to this point is incurred by the vendor; all further costs and risks are transfered to the buyer beyond this point
F.C.&S CLAUSE : Clause within the marine insurance policy where the insurance company excludes coverage of any loss due to seizure or capture or arrest, restraint, or detriment and consequences thereof or any attempt (except piracy) and from all consequences of hostilities or war-like operations whether prior to or after declaration of the war
F.C.A. ((FREE CARRIER) : Contract sale terminology where the sellers are responsible for delivering the goods to a carrier named by the buyers at locations specified by them; risks until this location remains with the sellers after which it is transferred to the buyers
F.I.R. : First Information Report loged with the police authorities in case of theft, explosion, or fire at the insured premises or road mishaps involving third parties; one of the claim documents required at the time of lodging third party liabilities under the policies
F.O.B. : Related to imports and exports contractual sale agreement; the seller has the responsibility of placing the goods on board the vessel and procuring the bill of lading; all risks prior to this placement is with the vendor; buyer must procure marine insurance for cargo during the journey till it reaches the final destination; in normal practice F.O.B buyers avail insurance on the cargo from warehouse to warehouse
F.O.B. INSURANCE : Insurance coverage procured by the seller to protect his or her interest on goods from the time these are dispatched from his or her location and continues until these are loaded on board the vessel and bill of lading is procured
FACTUAL EXPECTATION : Strong and fair expectation of any occurrence resulting in someone procuring an insurance interest in a property in due course of time; in marine insurance an individual can insure cargo where s/he has no insurable interest while proposing for the policy but has factual expectation of acquiring such interest at some later date
FACULTATIVE OBLIGATORY OPEN COVER : Similar to facultative obligatory treaty with one difference; there is no line limitation in this
FACULTATIVE OBLIGATORY TREATY : Agreement under which the ceding party can cede (but no binding) in case of pure facultative placements but the reinsured must accept under the agreement certain share of the specified underwritten risk by the ceding company; treaty has characteristics of facultative cessions as well as obligatory treaties; normally available after surplus treaties and provide automatic reinsurance covers to ceding company after the exhaustion of the surplus capacity
FACULTATIVE REINSURANCE : Oldest reinsurance method; every risk is separately considered and reinsured; necessary for the insurance company to supply the reinsurer all the material details about the risks to ensure the latter is able to make an appropriate decision to accept reinsurance and the rate thereof
FAILED WELL INSURANCE : Cover providing compensation to the insured in case dug well fails to provide the specific amount of water; compensation is also paid in case the side walls collapse during the digging process; insurance is available for open wells and bore wells (only new ones)
FAILURE OF BRAKES : Consequential damages available under insurance plan in case brakes of an insured vehicle fail to perform the necessary function resulting in a raod mishap
FAILURE OF CONSIDERATION : Occurs in the event the risk for which insurer has accepted premium fails to attach; full premium paid is refunded except in case of any fraud
FAIR MARKET VALUE : The price at which any service or asset passes from willing seller to willing buyer; where both parties are assumed rational with reasonable knowledge of all the relevant facts
FAIR VALUE EXCHANGE ACCOUNT : New account as per the IRDA regulations; listed equities, derivatives, and securities are to be assessed for fair value on date of the Balance Sheet; fair value is lowest of the quotations towards the securities or instruments on the exchanges; insurer must compare fair value with book costs and impairment in the value must be transferred to Fair Value Exchange Account; unrealized losses or gains due to changes in fair value must be taken to the Fair Value Exchange Account and when these are realized the same must be transferred to the Profit and Loss Account
FALL OR DISPLACEMENT OF BUILDING CLAUSE : Provision within the standard fire and special perils policy stating all covers under the plan will be discontinued on the expiry of 7 days of displacement or fall of insured building or part thereof or of the whole or any part of the insured buildings or of any structure that forms part of the insured building; also referred to as “fallen building clause”
FAMILY COVERAGE : Property and/or personal insurance where any addition to the insured, her or his dependants is covered as insured people
FARMERS PACKAGE COVER : Comprehensive package insurance benefiting the farmers for covering individual, her/his family members, property (house, animals, animal driven carts, agricultural tractors, etc.) against all kinds of losses or damages and accidental injuries or demise
FATAL ACCIDENTS ACT, 1855 : An Act providing in case of demise of an individual due to wrongful act, negligence, or default, an action for damages can be maintained by legal heirs of the deceased person against the party causing the injury; the act abolished the rule of common laws as per the civil action for damages died with the individual to whom or by whom tort was committed
FATHOM : Measurement used for assessing the sea depth based on one fathom being equal to 1.8288 meters
FIELD STAFF : Company personnel whose work is primarily done outdoors and comprises procuring or soliciting insurance business either directly or through agents; remuneration is through monthly salary and allowances but are also paid profit and growth incentives for business procured by them; they enjoy additional benefits and perks; exist only in 4 national insurance companies and governed by special scheme known as Development Officers Scheme
FILE AND USE PROCEDURE : Formally submitting insurance product along with complete details of rates and covers, terms and conditions that apply to the Regulator prior to marketing the product; in case of no response within the specified time period; plan is deemed as approved
FINANCIAL REINSURANCE : Substitute to conventional reinsurance where funds are used as a method for spreading losses or profits over a period of years after discounting handling costs, commissions, fees, and other related expenses; complementary arrangement for traditional reinsurance where the full capacity is unavailable
FINANCIAL RISKS : Risks associated solely with finance received or extended; in various forms by an enterprise or individual resulting in the beneficiary of finance not carrying out or unable to carry out the financial obligation/s under the agreement; certain types of financial risks are covered under insurance policies
FINANCIAL UNDERWRITING : Method to evaluate results of reinsurance treaty whereby factors like loss or gain due to foreign exchange or premium earned are considered
FINISHED GOODS : Goods or products that are completely manufactured, built, assembled and ready for selling
FIRE : Combustion accompanied by glow or flame escaping the normal confines to cause damages
FIRE & THEFT RISKS : Related to motor insurance it refers to restricted coverage provided to a vehicle in the garage and not in use; All India Motor Tariff provides policies can be issued for covering risks of Fire including riot, earthquake, strike, flood, and other perils; theft while the vehicle is in the garage and not in use at specialized decreased premium rates
FIRE AND ALLIED PERILS : Term that conventionally is used for denoting additional perils with fire; lighting, storm, cyclone, tempest, flood, hurricane, innudation, tornado, typhoon, aircraft damage, impact damage, earthquake, implosion or explosion, bush fire, riot, terrorism, strike, malicious, missile testing operations, subsidence and landslide (includes rock slides), and leakage from automatic sprinkler installations
FIRE BRIGADE : Group of special professionals trained in extinguishing fires
FAULT TREE ANALYSIS : Diagramatic representation of cause and effect when specific actions are continued or taken; such analytical method is being used to understand engineering prevention and cause
FAULTY DESIGN : Terminology related to builders risk insurance; relevant clause when attached to the policy offers cover for damage or loss to insured property due to faulty design of any part/s but not exceeding coverage for repair, modifcation, replacement, or renewal of such part/s; nor expenses or costs incurred for alteration or betterment of design
FAVOURED REINSURANCE TERMS : Reinsurers at times insist reinsurance treaty terms to be standard for all reinsurers of a treaty in non-reciprocal trading; there must be no discrimination or concessions to few; reinsurers accept share subject to favored reinsurer’s terms
FEA DISCOUNT : Discount available for the installation of Fire Extinguishing Appliances within the insured premises; ranges from 2.5% to 10% of the premium amount and depend on the installations
FEASIBILITY STUDY : Studies undertaken to determine workability of proposed project due to various factors related to economical, political, physical, and environmental aspects; normally conducted by experts in the specific field
FGU LOSSES : “From Ground Up” losses used in relation to excess of loss reinsurance that refers to incurred losses of protected portfolio of an extra-large coverage that also is the ultimate net loss within this cover
FIDELITY EXCLUSION : Provision for burglary and money insurance plans that exclude losses resulting from infidelity of the insured’s employees; provision within professional and liability indemnity policies excluding coverage for the dishonest acts of insured
FIDELITY GUARANTEE POLICY : Insurance plan that reimburses employers from losses resulting due to dishonest or fraudulent acts committed by the employees
FIDUCIARY : Individual holding something in trust on behalf of another person
FIDUCIARY RELATIONSHIP : Relationship resulting when an individual holds something in trust for another individual
FIRE ENGINE : Motor truck equipped with pipes and water tank to spray chemicals and water on fires for extinguishing these; when the fire engines are maintained by insured discount is provided on the fire premium rate to recognize said feature as risk improvement
FIRE EXTINGUISHER : Instrument using non-combustible substances such as carbon dioxide for putting off fires through deprivation of oxygen
FIRE HAZARDS : Chemical or physical properties of any matter in whatever state that makes it susceptible to fires in different degrees
FACULTATIVE REINSURANCE : Kind of reinsurance whereby reinsurer can reject or accept any risk presented by insurance companies seeking reinsurance
F.O.R. FREE ON RAIL : Similar to free on board except it being primarily related to internal trade transactions
FIRST PARTY CLAIM : Claims made by the policy holder to her/his own insurance service provider; contractual claims arising through the insurance contract betweent the insured and the insurer
FACE AMOUNT : Amount stated on the face of the insurance policy payable in the event of death or on maturity; does not include any additional amounts payable under accidental demise or special provisions or acquired through application of policy dividends
FACILITY : Pooling mechanism for insured unable to procure insurance in the voluntary market; insurers write and issue policies but cede the premium and losses on these to central pool shared by all insurers
FACILITY OF PAYMENT : Contractual provision allowing insurance company under certain conditions to pay insurance benefits up to a certain amount to an individual/s other than the insured who is designated beneficiary or insured estate
FACTORY MUTUAL : Mutual insurance company that insures only those properties that meet higher underwriting standards; emphasize loss prevention
FAIR PLAN : Facility operating under government-insurance cooperative program to make fire insurance and other kinds of covers easily available for indivudals and businesses that cannot avail or afford such coverage
FAIR PREMIUM : Premium level that is adequate for funding an insurance company’s expected costs and provides owners fair return on the invested capital amount
FAIR RENTAL VALUE : Amount payable to insured homeowners for loss in rental income resulting from damage making the property inhabitable
FAMILY EXPENSE POLICY : Policy whereby policyholder and her/his immediate dependants often children and spouse are insured
FAMILY INCOME POLICY : Special kind of life insurance policy that combines decreasing term and whole life insurance and pays monthly income of a certain amount for every Rs 1000 covered in the event of the insured’s death; monthly income is paid until the end of the period when the face amount of the insurance policy is paid
FAMILY POLICY : Life insurance policy offering cover to all or several members of the family under one contract; generally whole life insurance on principal earner and minor amounts of term insurance on the other spouse and kids includes those born after the issuance of the policy
FAMILY PURPOSE DOCTRINE : Concept imputing negligence committed by immediate members of the family while driving family car to the car’s owner
FARM MUTUAL : Local mutual insurer that provides insurance cover for farm properties within a limited geographical area often through assessable plans
FARMOWNERS-RANCHOWNERS POLICY : Package cover for ranch or farm providing the property and liability covers against business and personal losses
FEDERAL CRIME INSURANCE : Protection against larceny, robbery, burglary offered by the federal government where the Federal Insurance Administration determines the existence of insurance availability
FEDERAL CROP INSURANCE : Comprehensive cover available at subsidized rate by government for crop losses that cannot be avoided; including the losses resulting from wind, hail, freezes, draughts, snow, plant disease, earthquake, and floods
FEDERAL FLOOD INSURANCE : Insurance sold by private service providers at reduced rates by federal government for people residing in flood zones and community joins programs and agrees for the establishment and enforcement of flood control and land use measures
FEDERAL SURETY BOND : Kind of surety bond required by federal agencies regulating action of businesses; guarantees that the bonded party complies with federal standards; pays all taxes or accured duties, pays any penalty if bondholder fails to make the payment
FEDERAL-SERVANT DOCTRINE : Common law defense to block injured employee from collecting workers compensation benefits if s/he has been injured due to negligence of fellow worker/s
FIDELITY BOND : Form of protection that reimburses employer for losses caused due to dishonest or fraudulent acts of the employees
FAS : Inco-term meaning free alongside ship
FAC : Inco-term implying free carrier
FOB : Inco-term that means free on board
FPA : Free of particular average
FIRE INSURANCE : Insurance contract indemnifying insured for losses caused due to destruction of insured property due to fire; field of insurance providing cover to insured’s property for several perils that includes fire
FIRST NAMED INSURED : First named insured on the commercial plans; latest forms allow the insurer to satisfy contractual duties by providing notice to the first named insured instead of requiring notice to all insured names
FLAT CANCELLATION : Cancellation of policy coverage as of the date of its commencement with no premium charged
FLOATER POLICY : Policy under terms of which protection follows moveable properties, covering wherever it may be
FRANCHISE : Provision within freight insurance conditions exempting insurer from particular average losses in one accident less than 3%; provision is waived if loss is due to fire or stranding of ship, collision, or sinking
FREIGHT : Goods moved on behalf of another; remuneration earned by vessel owner or manager for carrying the goods that includes profits derived from carrying own cargo
Glossary on General Insurance Terms starting with G
GAINFUL EMPLOYMENT : Related to permanent total disability under personal accident insurance policy; disablement must be permanent and irrecoverable; total whereby the insured individual is unable to engage in any form of employment allowing him/her some financial benefits
GARBLING CLAUSE : Relates to transit or marine insurance of commodities, such as tobacco, grain, or coffee beans; offers insurer incurring the garbling cost (sifting and cleaning to separate good from the whole) to prevent further damage thereby reducing claims
GENERAL AVERAGE : Losses that arise due to extraordinary sacrifices made or incurred expenses towards preservation of vessel and cargo to be proportionally borne by interested parties; General average principle forms component of maritime law and is applicable irrespective of whether the marine adventure is insured or not
GENERAL AVERAGE CONTRIBUTION : Monetary contribution needed from shipowners and cargo owners for general average expenses and sacrificies; underwriter is liable for general average contribution paid or payable by the insured when general average act is undertaken for prevention of loss from any kind of insured risk; this liability is limited to proportionate amount of the payable contribution if the value of interest exceeds insured value
GENERAL AVERAGE COUNTER GUARANTEE : If the shipowner declares general average, it implies insistence on production of unlimited guarantee provided by the underwriters; underwriters issue unlimited guarantee against counter guarantee whereby the owner commits to reimburse underwriter overpayment resulting due to under-insurance; on completion of adjustment insurers first pay contribution payable through insured interest
GENERAL AVERAGE DEPOSIT : If there is no acceptable form of guarantee the cargo receiver is needed to deposit into general average fund prior to taking delivery; the amount is payable as general average deposit and slightly exceeds estimated contribution; deposit receipt is issued against the deposited money and earns interest; at the end of adjustment deposit holder is paid the difference between the amount and accrued interest and contribution
GENERAL AVERAGE ESSENTIALS : Entire adventure must be at risk; it must be imminent; voluntary act that is prudent and reasonable; performed to save interests of all parties involved; expense or sacrifice should be extraordinary in nature
GENERAL AVERAGE EXPENDITURE : Extraordinary expense incurred by vessel owner reasonably and intentionally to preserve property from peril involved in normal maritime adventure; such expenditure can be recovered from general average fund but not directly from underwriters; underwriters’ liability is limited to the part of expense that relates to general average contribution that is payable through insured interest
GENERAL AVERAGE FUND : Fund created by vessel owner and average adjuster appointed on the declaration of general average; through deposits collected related to general average adjustment; shipowner has authority without needing to await final adjustment to withdraw from this fund for general average expense
GENERAL AVERAGE GUARANTEE : Cargo underwriters are willing to commit for payment of assessed contribution against insured cargo written guarantee is provided for paying contribution attaching insured interest; such guarantee is acceptable to vessel owner only if it is guaranteeing payment of full contribution assessed related to insured cargo; underwriters issue this unlimited guarantee on obtaining from insured counter guarantee for reimbursing underwriters for overpayment because of under insurance
GENERAL AVERAGE LOSS : Loss occuring due to or directly related to general average act; includes general average expense as well as sacrifice
GENERAL AVERAGE REFUND : Relates to the difference between general average deposit and actual general average contribution related to any interest saved through general average measures; refund is payable when party holding the deposit is willing
GENERAL AVERAGE SACRIFICE : Sacrificing one or multiple involved interests in the adventure to save majority of other interests
GENERAL DAMAGES : Damages awarded to injured individual for intangible losses that do not readily lend to qualitative measures; commonly known as pain or suffering; general damages are differentiated from special damages that are actually awarded for economic losses; like medical, legal, repairs, loss of income etc
GENERAL INSURANCE BUSINESS : Fire, marine, or other miscellaneous insurance business either carried singly or in contribution with one or multiple of these
GENERAL LIABILITY INSURANCE : Coverage related to claims arising from insured’s liability for damages or injuries caused due to property ownership, manufacturing or contracting operations, distribution or sale of products, and machinery operations, and also professional services
GENERAL OPERATING EXPENSE : Admin expenses incurred by insurance companies that exclude commissions paid to the agents and taxes
GEOGRAPHICAL LIMITATION : Territorial jurisdiction available under the insurance cover; personal lines of liability insurance confine accidental coverage within the country unless otherwise specified in the insurance contract; motor vehicle insurance can be extended on request to include locations like Bhutan, Lahore, and Nepal without any additional premium and Bangladesh by paying flat additional premium given in the All India Motor Tariff
GHOST ANIMALS : Non-existent animals; it is possible to avail insurance for non-existent animals and filing claims by making false records and claim documents
GINNING : Process related to cotton; staples are combed to eliminate the cotton seeds; the process is done within the ginning department of the factory, which includes fire hazard possibilities
GOLFERS EQUIPMENT INSURANCE : Special coverage for non-professional golfers providing cover to golf equipment from accidental damages either in the golf course or while in transit, personal effects of insured against fire and theft in or at any golf facility, and liability of the insured from third party for bodily injury, and property damage while practicing or playing
GOODS : Merchandise excluding personal effects and/or provisions and stores that are used on board
GOODS CARRIAGE : Motor vehicle constructed or adapted for the sole use of carrying goods; any other vehicle not so constructed or adapted when used for transitting goods
GOODS IN TRUST OR ON COMMISSION : Person holding property of another in trust or commission possesses deemed insurable interest in the property and can avail insurance in his/her name
GOODS SENT ON APPROVAL : Property of goods passes from seller to buyer; when buyer signifies approval to seller or does any act adopting the sale; or if buyer does not approve but retains the goods by providing rejection notice within the stipulated time period, or reasonable time if such stipulation is missing, seller has insurable interest in goods until either of these two alternatives occur
GOODWILL : Reputation of the business that is expressed in certain monetary valuation; not insured by property insurance companies because of lack of measurable yardstick
GRADED RETENTION : Any single risk retention in pro-rata treaty that is top or graded; implies direct insurer has maximum retention limit that can reduce in certain cases based on qualitative analysis of these risks; retention reduction implies correponding decrease in surplus treaty capability due to line limitation
GRAMIN PERSONAL ACCIDENT INSURANCE (G.P.A. POLICY) : Special personal insurance cover available for the benefit of people residing in rural areas; with sum assured per person being Rs. 10,000 at Rs. 5 premium; policy covers risk against death, loss of eyesight or limbs, and permanent total disability due to accident
GRIEVOUS INJURY : Injury endangering life of an individual or causing the sufferer severe bodily ache or inability to complete regular daily tasks for several days; term is specifically used for Hit and Run vehicular accidents where specified compensation is payable to the grievous injuries
GROSS DOMESTIC PRODUCT : Measurement of value of all the goods and services produced and delivered during a one year period
GROSS LOSS : Loss incurred by the direct insurer for 100% of any one risk that has been insured by her/him
GROSS NATIONAL PRODUCT (GNP) : Total final value of services and goods produced in the country’s economy over a period of one year; GNP growth rate is the most important indicator of the economic status of the nation
GROSS NEGLIGENCE : Reckless action without paying any heed to the possible consequences
GROSS NET PREMIUM INCOME : Companies that protect the net account through XL coverage, the premium in the account is pro-rata to the retained line on risks; such net account is gross net premium income of the compan; gross implies premium prior to any deductions
GROSS PREMIUM : Premium paid by the policyholders
GROSS PROFIT : Sum insured related to consequent loss policy based on the gross profit; represents the amount of net profit and the insured standing charges or in case of no net profit, the amount of insured standing charges reduced in the proportion of trading loss as the amount of insured standing charges bears in relation to all standing charges of the business
GROSS RATE : Sum of pure premium and the loading factor
GROSS VEHICLE WEIGHT : Total weight of the vehicle and load registered and certified by the Registering Authority as permissible for the concerned vehicle
GROUND : Includes all periods during which the aircraft is not flying, moored, or taxying
GROUP DISCOUNT : Discount on the premium as per the prospectus or manual rates depending on the number of people covered under the group personal accident or mediclaim plan; group discounts are also allowed for Industrial All Risks Policy; householder comprehensive policy, shopkeeper package policy, where the discounts are related to number of availed covered sections
GROUP INSURANCE : Insurance cover for group of individuals who are engaged in common activity; employees of a company, members of a professional association, registered farmers as a society for rural activities; insurance companies issue group policies for accident, professional indemnity, and medical insurance
GROUP MEDICLAIM INSURANCE : Medical cover issued in favor of an enterprise or organization or employer for covering the employees and sometimes even dependents; policies are also issued to clubs or associations for members’ benefits; essential requirement for group policy include common relationship among insured persons, and central administration point for the policy scheme
GROUP PERSONAL ACCIDENT INSURANCE : Personal accident cover issued in favor of an enterprise or organization or employer for covering the employees and sometimes even dependents; policies are also issued to clubs or associations for members’ benefits; essential requirement for group policy include common relationship among insured persons, and central administration point for the policy scheme
GROWTH RATE : Percentage change in the quantum of business compared to the base year; growth rate in business of each year over prevoius year is assessed through insurance companies for assessing business performance vis-à-vis targets, analyzing reasons for deviations, and adopt corrective measures as required; growth rates of individual field personnel is assessed every year to ascertain individual employee’s eligibility for annual increment and growth incentives according to the scheme
GROUP LIFE INSURANCE : Life insurance cover without medical examination on group of individuals under a master policy; typically issued to employers for employees’ benefits or association members; individual members hold certificates as evidence of the coverage
GENERAL INSURANCE BUSINESS NATIONALIZATION ACT, 1972 : Incorporated in September 1972 established for providing acquisition and transfer of shares of Indian Insurance Companies for serving economy in a better way by securing development of general insurance business through appropriate regulations and controls
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP) : Accounting principles and business reporting rules developed by the American Institute of Public Accountants
GENERATION SKIPPING TAX : Transfer tax imposed on gift or inheritance to those at least 2 generations younger than the individual making such transfer
GLASS INSURANCE : Protection for damage or loss to glass and related appurtenances
GOOD STUDENT DISCOUNT : Decrease in automobile insurance premium for young drivers who are at least 16 years and rank among the upper 20% of her/his class, has B or 3 average, or is on the Dean’s list or honor roll; based on the premise that good students make better drivers
GRACE PERIOD : Specified period after the premium due date during which the insured can pay the premium amount; all benefits and covers under the policy continue during this period
GRADED COMMISSION SCALE : Commission scale offering payment of higher first-year commission and lower commissions on renewals
GROSS ESTATE : Total of the assets and liabilities of an individual at the time of his or her demise
GROUP ANNUITY : Pension plan offering annuities on retirement to group of people under a master contract; usually issued by employer for employees’ benefits; individual employee possesses certificate of evidence
GROUP ANNUITY CONTRACT : Contract issued by life insurance company used as funding instrument for the benefits made in accordance to the pension plans; single master contract offers the group of participating members annuities during their retirement; individual certificates are issued for evidence
GROUP CONTRACT : Insurance contract with the employer or another entity covering group of persons identified as individuals by referencing their relationship to the entity
GROUP CREDITOR LIFE INSURANCE : Life insurance provided to debtors by the lending institution/s for offering cancellation of outstanding debt obligation in the event of borrower’s death; generally term insurance is limited to the loan amount
GROUP MAJOR MEDICAL PLAN : Single policy covering group of individuals often company employees or association members and their dependants; cover is available under master policy issued to the association or employers
GROUP ORDINARY LIFE INSURANCE : Group insurance plan offering life insurance for the employees; traditional whole life policy is split into reducing insurance protection and enhancing cash values
GROUP PAID-UP LIFE INSURANCE : Accumulating units of single premium whole life insurance and reducing term insurance that together are equivalent to the face value of the policy; provided through the group life insurance policy
GROUP PERMANENT PLAN : Pension plan whereby the cash value life insurance is issued on group basis and cash values of individual policy are used for paying retirement benefits at the time of the retirement of the worker
GROUP SURVIVOR INCOME BENEFIT INSURANCE (SIBI) : Survivor income benefit insurance
GROUP TERM LIFE INSURANCE : Commonest form of group life insurance; annual renewable term insurance for employees during their working lives
GROUP UNIVERSAL LIFE PRODUCTS (GULP) : Universal life insurance policies that are sold to group members like individual employees; some differences between GULP plans and individual universal life plans exist; one being GULP expense charges are generally lesser than the expenses assessed against individual policies
GUARANTEED INSURABILITY OPTION : Future Increase Option
GUARANTEED INVESTMENT CONTRACT : Investment contract with an insurance company whereby the insurer guarantees principal as well as interest on the pension contribution
GUARANTEED PURCHASE OPTION : Benefit that can be included to life insurance plans that permit injured to acquire additional amounts of life cover at specific times during the future without needing further evidence for insurance eligibility
GUARANTEED RENEWABLE : Contract whereby insured has right to continue the cover through regular premium payments until the age of at least 50 years, or where the policy is issued after the age of 44 for a period of at least 5 years from the date of issue during this period the insurance company does not have any rights to make any modifications unilaterally within the insurance contract while the policy continues to be in force except the insurer can amend the rate of premium on the basis of classes
GUARANTEED RENEWABLE CONTRACT : Health insurance policy wherein the company guarantees renewal for the life of the assured or until s/he reaches a certain specified age, which is generally 65 years
GUARANTY FUND : Fund derived through assessments against solvent insurers for absorbing losses of the claimants against insolvent insurance service providers
GARAGEKEEPERS LEGAL LIABILITY POLICY : Cover for losses that are legally insured resulting from fire or explosion, vandalism or riot, upset to vehicles in his/her care, control, or custody, theft of the entire vehicle, and collision
GARAGE LIABILITY POLICY : Liability contract designed for providing the owner of a garage with the liability protection required for special hazards existing in the premises
GENERAL AGGREGATE LIMIT : Commercial general liability limiting all applicable damages payable for any bodily injuries, personal injury, medical expenses, and advertising injuries except the damages included in product completed operations hazard
GENERAL AVERAGE IN FULL : Also written as G-A in FULL is an agreement within a cargo insurance policy wherein the underwriters do not lower claims for general average contribution in case of under insurance
GENERAL EXCLUSION CLAUSE : Clause in the Institute Cargo Clauses 1982 that specifies the excluded risks irrespective of those risks that are covered elsewhere in the wordings
GLASS COVERAGE FORM : Commercial property form used for insuring plate glass, ornmentation, lettering, and frames. Replacement for earlier commerical glass insurance forms
GOOD FAITH : Basic insurance principle, assured and her/his broker must disclose and truly represent all material facts to the underwriters before accepting the risk; breach of good faith entitles the insurers to avoid the contract
Glossary on General Insurance Terms starting with H
HAZARDOUS SUBSTANCE : Related to Public Liability Insurance Act 1991 meaning list of chemicals with categorized quantities as hazardous substances and published as Notification by the Central Government; the act provides for public liability insurance for purposes of providing immediate relief to the affected person/s by accident occuring during the handling of hazardous substances
HIT AND RUN MOTOR ACCIDENT : Accident that arises from the use of motor vehicle/s where the identity is not certainable irrespective of reasonable efforts for this purpose
HAGUE RULES : Following International Maritime Law Conference in Brussels in 1922, a set of rules that were agreed to establish the rights and immunities of the carriers related to the carriage of goods by sea; many countries agreeing to these rules have incorporated these under statutory acts like Carriage of Goods by Sea Act 1924
HAIL RISK INSURANCE : Insurance cover available against hail storm damages to crops provided as part of the Crop Insurance Cover
HAND APPLIANCES : Any portable fire extinguisher device comprising chemicals to put out fires. Hand appliances are basic needs for risks that are considered for availing discount in the fire premium rating under the standard fire and special perils policy
HARD MARKET : Market situation where competitive pricing is at the minimum charged by the companies; the premiums for covering underwriting losses to avoid insolvency and boosting capacity often related to sharp declines in capacities
HAZARD : Condition/s that create or enhance the risks of losses due to any perils
HAZARDOUS GOODS : Goods (either solids, liquids, or gases) susceptible to the risk of fire in different degrees as per their physical properties; hazardous goods can be classified as I, II, III, and IV and are accordingly rated for the purposes of insurance within the standard fire and special perils policy
HAZARDOUS RISKS (FIDELITY GUARANTEE INSURANCE) : Risks not considered as good for insurance because high hazards associated therewith and higher instances of claims; eg jewellery sales person/s, cashiers in restaurants, cinemas and other entertainment facilities; treasurers of associations or societies; bullion merchant employees, art works in antiques or fur and valuables
HAZARDOUS SPORTS : Related to personal accident plans, sport activities that have higher risks like horseback or vehicle racing, mountaineering, skiing, big game hunting, river rafting, winter sports, balooning, ice hockey, hand gliding, etc. people engaged in such activities are categorized as high risk groups and need to pay higher premium when proposal is accepted by insurance companies
HEALTH INSURANCE BUSINESS OR HEALTH COVER : Contractual effecting providing sickness benefits or surgical, hospital expense benefits, whether in-patient, out-patient, on an indemnity, prepaid, reimbursement, hospital, or other plan basis also includes assured benefits and long-term care
HEATING AND SWEATING : Former is peril existing with respect to cargo prone to heating through spontaneous combustion (coal or oil cakes) in bulk quantities; sweating relates to water damages caused due to condensation of water in the ship or container hold in conditions of various weathers or atmospheres
HEATING OR DRYING PROCESS : Process undertaken in manufacturing where some property can be heated and dried to eliminate water content; any damage or loss to the same due to overheating or drying is not covered under the standard fire and special perils policy
HEAVY INDUSTRY : Traditional production companies in the steel, petroleum, automobile, rubber, and raw materials industries; needing higher capitalization and producing larger quantities of the output; heavy industries employ several people and beset with environmental impact
HEDGING : Importers or exporters strategy related to future sales or purchases; for overcoming loss resulting from increase or decrease in price because of currency fluctuation; protection is available by hedging against the exchange movement through forward contract
HOLD-UP : Robbery involving violence or threat of violence; risk that is covered under the standard burglary insurance plan
HOMOGENEOUS EXPOSURES : Risks within group under study that possess similar characteristics to larger extent in terms of exposure to similar loss making events and loss expectations; study of homogeneous exposure is undertaken for the purpose of fixing the premium rates and other terms and conditions related to insurance cover
HOMOGENOUS RISKS : Activities, properties, or interests that have exposure to similar perils and normally meet with similar loss making situations in case of these perils; insurance companies consider homogenous risks through evaluation as per cause and effect with the objective of quantifying the possibilities and severity to fix standard premium rates and cover terms and conditions
HONEY BEE INSURANCE : Coverage available for hives and/or bees colony belonging to cooperative societies against accidental damages or losses; claim settlement is according to agreed value representing cost of hive and bee colony cost that is attached to the policy as a valuation table
HOSPITAL CONFINEMENT INDEMNITY INSURANCE : Cover available for fixed compensation on daily basis during the treatment period in nursing home or hospital for any sickness, injury, or ailment against the regular mediclaim policy that provides reimbursement of the actual expenses incured for the treatment; any such product needs to be marketed in India after adopting the principle of “file and use” as per the regulatory authority
HOSPITALISATION : Admission of the patient in nursing home or hospital for treating injury, disease, illness, or sickness
HOSPITALISATION INSURANCE : Insurance cover for individuals offering reimbursement of the expenditure incured towards hospitalization due to injury, illness, disease, or sickness; cover can be extended for domiciliary hospitalization under specific conditions; individuals and dependants are covered under the plan
HOSTILE FIRE : Fire that is not confined to normal bounds and spreads beyond the habitat; example fire due to gas stove spreading to nearby items resulting in a larger fire; hostile fire is coverable under policies that extend to cover fire risks
HOT TESTING : Related to project insurance includes operational tests that involve parts checking, elements, and/or production lines of the insured property under partial or full load and normal stipulated operating conditions involving use of feedstock or other materials needed for normal processing and other media for load simulation; in electrical power stations hot testing implies checking after connection to grid or other load circuit of electrical generating, transforming, converting, or rectifying equipment. Commissioning tests or acceptance tests in turn implying operations of insured property under protection conditions for purposes of attaining quality and quantity specifications requirements
HOURS CLAUSE : Clause within XL reinsurance defining any one event of loss for the purposes of recovering losses from the XL cover; according to the clause any one event means 72 consecutive hours of single event like tidal waves, volcanic eruption, storms, seaquake, or earthquake; or 168 hours of flooding event; or manmade catastrophies like riots, civil commotion defined as 72 continuous hours for one event in a city; or 168 consecutive hours taken as single event for any other catastrophy
HOUSEBREAKING : Individuals commit house breaking when they trespass and their entries affect the property; commit any offence, or having committed offence s/he quits the house such exit and entry being made in 6 ways described in Penal Code
HOUSEHOLDERS COMPREHENSIVE INSURANCE : Insurance package designed for homeowners with broad range of liablility and property coverage relating to events at home and the outside
HULL INSURANCE : Insurance on the vessel, and its equipment and machinery
HURRICANE : Tropical storms marked by very low barometric pressure and circular winds at velocity exceeding 125 kilometers per hour and more
HURRICANE INSURANCE : Component of the perils named “storm, inundation, cyclone, flood, typhoon, tornado, hurricane, tempest”, which is in-built within the cover under the standard fire and special perils plan; this group of perils can be opted out by the holders in order to reduce premium expense
HUT INSURANCE : Insurance cover for dwelling huts in rural locations constructed using finance assistance from banks or cooperatives or government institutions, cover available against fire, flood, earthquake, and inundation, malicious damage, storm, terrorism or riot, impact damage, etc.; insured value of Rs 6000 per hut
HUT INSURANCE SCHEME – FOR POOR FAMILIES IN RURAL AREAS : Special scheme provided by Indian government with the aim of providing relief to very poor families in rural areas when their belongings and huts are destroyed due to fire; very poor families imply rural inhabitants whose annual income from all sources is not more than Rs 4800; compensation per hut is Rs 1000 and for belongings it is Rs 500; administered by 4 national insurers with active participation from state government and union territories, effective since 1st May 1988
HYDRANT SYSTEM : Large discharge pipe system with valves at different locations for drawing water from the main; installation of the system along with existence of hand appliances will procure discount on the rate of premium under the standard fire and special perils policy
HEALTH INSURANCE : Protection from financial losses due to accidental bodily injury or illness; various heads included like accident, disability income, medical expense, and accidental demise and dismemberment insurance
HOSPITAL EXPENSE INSURANCE : Health insurance cover offering protection against hospital care cost resulting due to injury or illness of the insured individual; provides daily hospital room and board as well as hospital services during the stay
HOSPITAL INDEMNITY : Kind of health insurance providing stipulated daily, weekly, or monthly indemnity during hospital stay; indemnity is payable on unallocated basis without any regard to actual expense of the confinement
HELD COVERED : Provisional acceptance of risk subject to the confirmation at later date that the cover is needed; when applicable to existing insurance coverage it is conditional in actual practice on the prompt advice of the underwriter as soon as the insured is aware of the circumstance/s to be held covered being into effect and additional premium rate is paid if held risk covered comes into effect
HIRED AUTOMOBILE : Vehicles that the insured person hires, leases, borrows, or rents but excludes vehicles owned by employees or household members
HMO : Health Maintenance Organization providing health care for monthly pre determined payment; traditional HMO, doctors, and other care providers are salaried employees at facilities owned by organizations; during recent years other kinds of HMOs have sprung up where they contract with hospitals and doctors for providing care to member sets at negotiated charges; some HMOs are hybrid providing both kinds of care to members
HOLD-HARMLESS AGREEMENT : Contractual arrangement wherein one party assumes the liability inherent in specific situation; thus relieving the other party from such responsibility; typically found in lease contracts; lease contract typically may provide less must hold harmless the lessor from liabilities due to accidents occuring from the leased premises
HIGH-RISK AUTOMOBILE INSURER : Companies specializing in insuring motorists that have poor records or drivers who have been refused insurance or their coverage has been cancelled
HOME SERVICE LIFE INSURANCE : Industrial life insurance cover and monthly debit ordinary life contracts serviced by agents who call on policyholders at their homes for collecting the premiums
HOSPICE : Healthcare facility offering medical care and support like counseling services to patients who are terminally ill
HOSPITAL ADMISSIONS PROGRAM : Arrangement for facilitating admission of persons covered under the health insurance to hospitals and for assuring prompt payments of applicable insurance benefits to the hospitals
HOSPITAL EXPENSE INSURANCE : Health insurance protection against the costs of the hospital care arising from treating the injury or illness of the insured person
HOSPITAL MEDICAL INSURANCE : Protection offering benefits for the cost of all or some of the several healthcare services covered under the health care plans
HOSPITAL MISCELLANEOUS SERVICES : Services excluding room, board, and general nursing services offered by hospitals during confinement; includes things like lab tests, x-ray, surgical dressings, medications, using operating room, and anesthetics (including its administration)
HUMAN LIFE VALUE : Present value of the family’s share of the deceased earner’s future earning potential
Glossary on General Insurance Terms starting with J
JACKET : Outercovering comprising insurance policy; normally furnishes brief information of coverage, exclusions, terms and conditions, etc. related to the coverage
JACKUP RIG : Relates to energy risks, an offshore drilling structure with derrick or tabular legs supporting deck and hull; when positioned over the drilling site, bottoms of legs rest on the seabed; jackup rig is towed or propelled to the location with the legs up; once the legs are firmly positioned at the bottom, deck and hull height is leveled and adjusted
JETTISON : Throwing the cargo overboard; step taken by the captain of the ship for saving the vessel and/or interests during common peril; claim for cargo loss so jettisoned can be recovered from marine insurance policy
JEWELLERS BLOCK POLICY : Insurance plans for jewellers needs; cover is available for stock-in-trade at the jewelers’ premises, stock in custody of employees, partners or other insured agents; stock in transit through insured post parcel, air freight, courier or angadia, office furniture, fittings, fixtures, and fittings in the premises against fire and other perils, theft, and burglary
JOINT ACCOUNT XL COVERS : Known as Common Account XL covers that are arranged for protecting retained quota and reinsured quota on every risk; arrangement is also known as reinsurance for joint account
JOINT AND SEVERAL LIABILITY : Legal term used for defining liability implying that any decree in court of law if made joint and several is enforceable against all parties sued or any one of them separately
JOINT CARGO COMMITTEE : Committee formed for deliberating issues related to cargo insurance and making recommendations for uniform implementation
JOINT CARGO SURVEY : Joint survey attended by carrier’s surveyor and surveyor appointed by owner or underwriter of the cargo in the event of loss to the goods
JOINT HULL COMMITTEE : Committee formed by company underwriter and Lloyds for deliberating issues related to marine hull insurance and make recommendations on premium rates policy terms and conditions for standard implementation
JOINT HULL SURVEY : Joint survey by insured surveyor and surveyor appointed by insurance company in the event of an accident to the insured ship resulting in claims under the insurance plan; classification society surveyor may also participate in case vessel class needs to be certified after repair of the vessel
JOINT HULL UNDERSTANDINGS : Understandings between the hull underwriters within the market providing a view for ensuring uniformity of approach on practices and principles related to hull insurance
JOURNAL ENTRY AND JOURNAL BOOK : Every accounting entry follows double entry that is debit one account and credit another account; some major items, separate book is maintained for recording the entries; these include sales and purchase book or cash book; for insurance companies such books could be commission, premium, and claims registers; all these books serve the purpose of journal entries for crediting and debiting the account head for the total of all transactions; in addition to these books there may be other transactions that are accounted by passing journal entries for every transaction; these entries are recorded in journal book
JUDGEMENT : Court determinations for completed jurisdiction on various submitted matters
JUDGEMENT BY DEFAULT : Judgment delivered in the courts in the absence of any one party involved in the litigation; either the defendant or the plaintiff
JUDGMENT RATING : Rate making technique for which every exposure is evaluated individually and rate is largely determined by the judgment of the underwriter/s
JUST COMPENSATION : Complete indemnity by the insurance company for the loss sustained by the assured
JOINT-AND-SEVERAL LIABILITY : Legal principle permitting the injured person during tort action for recovering full compensation amount because of injuries from any tort feasor who is able to pay irrespective of the degree of the party’s negligence
JOINT-AND-SURVIVOR ANNUITY : Contract providing periodic income that is payable during longer lifetime of two individuals; amount payable may reduce at the time of demise of one or the other
JOINT TENANTS : Form of joint property ownership with survivorship right; whereby survivors automatically own the share of dead co-owner
JOINT UNDERWRITING ASSOCIATION : One of the numerous kinds of “shared market” techniques used for making auto insurance available to people who are unable to procure such coverage in the regular insurance industry; these also have been developed in some states for helping alleviation of availability issues in fields like commercial or medical malpractice insurance
JUDICIAL BOND : Kind of surety bond used for the court proceedings and guarantee that the bonded party will fulfill specified obligations defined by the law; such as fiduciary responsibilities
JUMBO RISK : Risk involving exceptionally large benefits
JUMPING JUVENILE INSURANCE POLICY : Life insurance procured by parents for children younger than a specified age; provides permanent life cover that increases in face value by 5 times at the age of 21 years without needing to pay additional premium
JOINT LIFE POLICY : Pays the insurance amount when the first of two or more insured individuals passes away
Glossary on General Insurance Terms starting with K
KENNEY RATIO : Proposal by Roger Kenney an insurance journalist to maintain solvency of property and casualtyinsurance company where premium should not be more than twice the company’s capital and surplus; method still in use by regulatory authorities for determining company claim paying capabilities while ensuring its solvency
KICK : Terminology used in energy risks refering to entry of oil, gas, water, and other fluid formation in bore well; occurs due to pressure exerted by column of drilling liquid is not sufficiently high for overcoming pressure exerted by fluids in drilledd formation; failure to kill well or control the kick can result in blowout
KIDNAP-RANSOM INSURANCE : Insurance cover available for providing payment within the specified time period in the policy demanded by the insured’s kidnappers
KEY PERSON HEALTH INSURANCE : Individual or group policy designed for protecting company against loss of income due to disability of key employee; such policy is still to be made available in the country
KILL : Energy risk term referring to (i) related to drilling associated with prevention of blowout by using the appropriate preventive actions (ii) related to production stopping the well from production of oil or gas to enable reconditioning of the well
KINDRED PERILS : Perils of the same type; burglary, hurricane, robbery, or storm
KNOCK-FOR-KNOCK AGREEMENT : Related to motor insurance agreement between two or more insurance companies to the effect that in case of collision among insured two vehicles with two separate insurers each company is to bear the loss related to the insured vehicle with them without going into the cause of which vehicle was at the mistake of causing the accident; no effective implementation of such an agreement by insurance companies due to many reasons
KNOT : Ship’s speed unit; a nautical mile (often calculated as 6080 feet – 1.151 statute miles or 1853 meters) per hour
KNOWN LOSS : Loss about which insured and/or insurance company is aware when the insurance is effected
KUTCHA CONSTRUCTION : Buildings with walls and/or wooden planks, grass, bamboo, hay, plastic cloth, thatched leaves, canvas, asphalt cloth, tarpaulin etc. such constructions attract additional premium rate under the standard fire and special perils insurance policy according to the All India Fire Tariff
KENNEY RULE : Concept allowing property liability insurance company to write off new net premiums for every additional cover of policy owners’ surpluses
KEOGH (HR 10) ACCOUNT : Account related to self-employed individual making annual tax deductible contribution of less than 25% of the income or specified amount
KEY-PERSON INSURANCE : Insurance cover designed for offering coverage to protect business firms against loss of income due to death or disability of key employee
Glossary on General Insurance Terms starting with L
LISTED COMPANIES : Companies whose shares are listed on stock exchanges for trading; respective stock exchange where the shares are listed provide regulatory guidelines for such companies related to accounts publications and disclosure norms and other details; which is why listed companies are more transparent
LOSSES DISCOVERED OR CLAIMS MADE BASIS : Term related to excess of loss reinsurance treaties implies all discovered losses that are reported or made during the period of treaty irrespective of date of inception of the original policies or the occurrence; such cover may sometimes be used when there is difficulty in determining the precise date of the occurrence
LOSSES OCCURRING BASIS : Related to excess of loss reinsurance treaties means cover that can be provided under such arrangement on occurring losses basis; implying all occurring losses during the treaty period irrespective of the start date of original policy/ies covered by the treaty
L.C.R. : Largest Claims Reinsurances; method more appropriate for liability reinsurances where statistical survey of larger losses taken on last 5 years and prescribed limit of the largest loss fixed so that reinsurance companies are liable to pay losses that are over this limit
L.P.G. GAS DEALERS INSURANCE : Comprehensive insurance package for the benefits of LPG gas dealers that provide cover for insured, office and service personnel, building and fixtures, contents inclusive of gas cylinders and other fixtures etc. against accidental personal injury and property damage, assured’s liability towards employees under the workers compensation act and also his liability to third parties and assured’s financial losses arising out of infidelity on behalf of employees
LABEL CLAUSE : Clause related marine cargo insurance; relates to canned or similar kind of goods that are labeled for identification of products where such labels may be damaged due to contact with water or other cargo insurance company’s liability is restricted to cost of repackaging and relabeling as per the clause
LAG : Period elapsing between claims actually occurring and when paid in actual
LANDED BUT MISSING : Situation where import or export cargo can be lost after landing at the destination port due to theft, over issue or incorrect carriage to another location; in all these cases Port Authorities will after some search issues certificate known as Landed but Missing or C Certificate
LANDING REMARKS : Remarks made by the dock authorities in their records displaying marks and numbers, condition, weight, etc., of landed goods; insurance companies need an extract of these records with respect to claim for loss or damage to insured cargo as evidence for the stage at which loss to cargo may have occurred
LAPSED POLICY : Insurance cover that has closed earlier to the actual expiration date because of non-payment of the payment of premium; relating to non-life insurance this situation would arise only in respect to marine hull policies or other plans issued for durations exceeding one year where the facility of installment premium is extended; when the assured fails to pay installment on or before this date the policy lapses on the due date
LARGE LOSSES INFORMATION : Information on large losses that is provided to reinsurance companies for the purpose of reviewing performance of treaties; either proportional or excess of loss treaty; related to proportional treaties, loss is considered “Large loss” when the amount is more than “cash loss limit” provided in the wordings; relating to excess of loss reinsurance loss is considered large loss when it is over 50% of underlying limit
LATENT DEFECT : Terminology used for referring to hidden flaws or defects within the structure of machinery or ship that is not readily discoverable by competent individual/s using reasonable skills in ordinary inspection; any damage or loss caused due to latent defect can be recovered under marine hull insurance plan providing coverage according to ITC (Hull) or IVC (Hulls)
LAW OF LARGE NUMBERS : Concept that is larger than number of exposures; more closely will be the actual results to the expected outcomes providing more credibility of predictions; this law forms basis for deriving the statistical expectation of loss on the basis of which premium is determined for covering different risks
LAWFUL ADVENTURE : Implied warranty related to marine insurance contracts to the effect whereby the adventure must be legal
LAY UP WARRANTY : Hull plans covering minor vessels like fishing and sailing boats carry “Lay up warranty” offering the insured ship be laid up out of commission during specific time period that is winter and monsoon months; vessels can be laid on mud, afloat, or hard
LAYOUT PLAN : Representation of the horizontal shape of building; ground floor shape is always taken and by including additional details plan is built-up to incorporate all features of the different storeys and the roof; plans comprise concise and clear form of important matters that cannot be covered in the inspection report
LAY-UP RETURNS : In marine hull insurance, scale of premium refund agreed by International Marine Insurance market at the time when insured ship must be laid up during the insurance duration; as risk to the insurance provider during this period is less compared to navigational risks return of premium is allowed by the insurance company during this laid up duration; return on premium is subject to certain terms and conditions imposed by the insurance company. For motor insurance, if automobile is laid up in garage risks covered with motor comprehensive insurance policy are limited to burglary, fire, or theft; which is why some portion of the premium is refundable as per the provisions of All India Motor Tariff
LEAD INSURER : Insurance company among co-insurers related to joint insurance by the service providers that has the largest share; lead insurer deals with the insured on all matters that relate to insurance, such as collecting the entire premium, issuing documents, servicing other client matters including claim settlement for all fully assessed loss; customary for coinsurers to issue the leader letter of authority for facilitating the leader to conduct the various functions on their behalf that is binding on them; normally ex-gratia settlement claim do not come under this purview; periodic settlements are effected as between the coinsurers and leader related to release of coinsurer’s premium share and collecting their share from the resulting losses
LEADER/LEADING REINSURER : Excess of loss reinsurance treaty terms are negotiated with a leader that quotes the rates and other terms and offers support with leading share; reputed leader makes it easy for completing placement of the good securities; other reinsurers agree to follow the leader; proportional treaty do not have a leader but there may be leading reinsurer with greater share
LEAKAGE FROM AUTOMATIC SPRINKLER INSTALLATIONS : Accidental leakage or discharge of water from automatic sprinkler installation arising from damage to sprinkler head due to impact from certain object or heat from some source/s other than fire resulting in sprinkler head to operate; damage or loss to insured property from such leakage is covered under standard fire and special perils insurance plan
LEASE : Contract where the owner of any fixed assets allows its use to the contracting party for a predefined time period in exchange for consideration in the form of rent; owner is known as lessor and user is the leasee
LEGAL LIABILITY : Financial liability imposed under civil laws towards third party/ies
LEGAL LIABILITY INSURANCE POLICY : Insurance cover providing indemnity to the insured with relation to financial consequences of legal liability; when such liability arises under civil law damages are payable; in addition there may be certain legal costs awarded against insured and defense of the claim that are reimbursed under the policy
LEGAL OPINION : Opinion offered by legal professionals in relation to some issue/s describing what is lawful or legal
LEGALITY OF THE CONTRACT : An essential component for any contract to be legally valid; applicable to insurance contracts; content in the contract should be legal
LENDER : Firm or individual extending money to borrower/s with an undertaking that such amounts will be repaid often with interest; lenders providing such loans against assets (moveable or immovable) have insurable interest in these assets
LESSEE : Individual in whose favor lease is provided; tenant under lease
LETTER OF CREDIT : Document providing authority for payment of certain amount to any person named at the insurance company’s risk; when expressed as irrevocable authority cannot be withdrawn
LETTER OF INDEMNITY : In case original policy is lost by the claimant, letter of indemnity is procured from her or him by the insurance company to the effect that if subsequently another individual presents any claim on the company with original policy, s/he will reimburse the claim amount paid and also hold the insurance company harmless for effecting settlement with her or him without producing the original policy; relevant to marine insurance due to free assignment-ability
LETTER OF TRANSFER (G.A) : Related to general average, it is letter procured from the insured by the insurance company after paying on behalf of the insured general average deposit that is payable by insured for general average; on its strength insurance company can receive from ship owner any excess deposit amount over the actual amount of contribution
LIABILITY : Legally enforceable obligation
LIABILITY INSURANCE : Insurance cover for protecting policy holder from financial losses due to any liability arising from injuries to other individuals or their property/ies
LIABILITY LIMITS : Sum or sums as stipulated in the insurance contract up to which the insurer needs to meet the claims made by the insured
LIABILITY OF CARRIER (CARRIAGE BY SEA) : Under affreightment contract, carrier is obliged to supply the ship that is cargo and sea worthy; in addition to providing competent crew to manage the ship he must carry, care, and deliver the cargo at its destination in same good condition when delivered to him; if due to account of failure of the carrier to discharge his obligations cargo is damaged, he is liable to reimburse such loss; vessel owner’s liability towards cargo is limited; carrier’s liability is insured through P&I Clubs and not within the regular marine insurance business segment
LICENSE : Legal authority provided to the companies, brokers, agents, or consultants for transacting insurance business within the applicable framework of legal guidelines and/or acts and/or regulations currently in force
LICENSE FEE : Amount paid by insurers or other companies or individuals as determined by the regulatory authorities for doing business as per the authority granted by the license
LIEN : Legal right of an individual on the property of another until the latter has satisfied the former’s liability
LIFE POLICY FOR 2 WHEELERS : Insurance coverage for 2 wheelers covering 3rd party risks and being valid until the vehicle is duly registered; provide continuous coverage for 3rd party liabilities for small vehicle owners
LIFT (THIRD PARTY LIABILITY) INSURANCE : Insurance plan for owners of passenger lifts for taking liabilities arising from usage and operations of the lifts; plan provides indemnity for legal liabilities of insured for paying compensation to 3rd parties for loss of life or bodily injuries or damage to third party property; legal expenses incurred by the insured with consent from the insurance company for defending legal action/s by third parties is payable under the coverage; policy contains 2 limits; one for single accident and other for all claims during the duration of the policy representing maximum liability of the insurance company
LIGHT MOTOR VEHICLE (LMV) : Transport vehicle or omnibus whose gross vehicle weight of either tractor, motor car, or toad roller, unladen weight does not exceed 7500 kilos
LIGHTNING : Flash of light in the sky caused due to atmospheric electricity discharge from one cloud to another or between earth and cloud; it may result in crevices in buildings or fire damages; it is a peril covered under fire as related to standard fire and special perils policy
LIMIT FOR ANY ONE LOSS : Maximum liability amount of the insurance company under the policy for any one kind of loss or series of losses due to a single event
LIMIT OF LIABILITY : Monetary limit to which insurance company or reinsurer is liable for single risk; when relating to reinsurance is expressed either as sum insured basis or probable maximum loss basis
LIMIT OF LOSS WITH REINSTATEMENT PROVISION : In excess of loss reinsurance treaties there exists a limitation to aggregate losses that are payable under the period of coverage by the reinstatement provision; if the limit is exhausted prior the expiry date XL cover is deaden prior to expiration
LIMIT PER ACCIDENT : Maximum liability of the insurance company for all claims arising from one accident
LIMIT PER BOTTOM : Maximum limit to which single shipment is covered under the open cover by the insurance company; limit per bottom clause appears in all open coverages for exports and imports
LARCENY : Fraudulent or wrongful carrying away or taking by any individual of personal property of another
LEGAL LIABILITY : Liability that is enforceable under existing laws or acts
LIABILITY : Portion of insurance company’s balance sheet that denotes legal obligations of the firm including the estimated future payouts for losses covered under issued policies
LOSS ADJUSTMENT EXPENSE : Sum insurance companies pay towards the investigation and settlement of insurance claims including cost of defending lawsuits in the court
LOSS AVOIDANCE : Risk management method where any situation or activity may result in loss for the firm is abandoned or avoided
LOSS CONTROL : Actions adopted for reducing the frequency and/or the severity of the losses
LABOR-MANAGEMENT RELATIONS ACT OF 1947 (TAFT-HARTLEY ACT) : Law controlling conditions under which employer may pay money to the representative of the employees
LAPSE : Termination or discontinuance of insurance policy because of non-payment of premium
LARCENY-THEFT : Unlawful taking, leading, carrying, or riding away with another individual’s property
LAST CLEAR CHANCE RULE : Statutory modification of contributory negligence law allowing claimant endangered by her or his own negligence for recovering damages from defendant if defendant has final clear chance for avoiding accident but fails to do so
LEGAL RESERVE : Minimum reserve that a company must maintain to meet future obligations and claims as these are calculated under state insurance code
LEGAL RESERVE LIFE INSURANCE COMPANY : Life insurance company operational under state insurance laws that specify maximum basis for the reserves organization requires to maintain on its policies
LEVEL COMMISSION SCALE : Commission scale that provides payment of commissions at standard rate every year during which the policy remains in force
LEVEL PREMIUM : Premium remaining constant during the entire tenure of the policy
LEVEL PREMIUM LIFE INSURANCE : Life insurance for which the premium amount is constant every year; premium is more than actual protection cost during the earlier years of the plan and lower than actual cost during the later years; building reserve is natural due to the premium levels; overpaying initially combined with interest earned serves to balance the lower payments in the later years
LIABILITY WITHOUT FAULT : Principle on which basis workers compensation is calculated; holding the employer absolutely liable for occupational injuries or illness to workers irrespective of fault
LICENSE AND PERMIT BOND : Kind of surety bond that guarantees the bonded individual to comply with all the laws and regulations governing his or her activities
LIFE ANNUITY : Series of payments when commence are continued for the entire life duration of the annuitant and beyond
LIFE ANNUITY WITH 10 YEARS CERTAIN : Annuity paying income to annuitant for as long as s/he survives; but if demise occurs within 10 years from the commencement of the annuity, payments continue to the beneficiary for the remainder of 10 years
LIFE EXPECTANCY : Average number of years of living remaining for group of persons of any given age as per the specific mortality table
LIFE INCOME OPTION : Life insurance settlements whereby the policy proceeds are paid during the life of the beneficiary; certain number of guaranteed payments may also be paid
LIFE INSURANCE : Insurance cover providing payments for specified amount on the demise of the insured either to her or his estate or designated beneficiary; in case of endowment policy, to the holder on specified date
LIFE INSURANCE IN FORCE : Sum of face values and the dividends of life insurance plans outstanding at particular time; additional amounts payable under accidental death or special provisions are excluded
LIFE INSURANCE PROGRAMMING : Systematic technique to determine insured’s financial goals that are translated to specific amounts of life insurance then periodically reviewed for possible modifications
LIFETIME DISABILITY BENEFIT : Benefit for helping replacement of income lost by an insured individual as long as s/he is totally disabled, even if it is for entire lifetime
LIMITED PAYMENT LIFE INSURANCE : Whole life insurance coverage where premiums are payable for specified number of years or until demise if death occurs prior to the specified time period
LIMITED POLICY : Contract covering only certain kinds of accidents or diseases
LIQUIDATION : Dissolving a firm through sale of assets for cash
LIQUOR LIABILITY LAW : Dramshop law
LIVING BENEFITS RIDER : Rider allowing insured individuals who are terminally sick or suffering from some catastrophic illnesses for collecting portion of their life insurance benefits prior to their death; primarily for the medical care required for them
LIVING TRUST : Trust created while the creator of trust is alive; also known as inter vivos trust
LLOYD’S OF LONDON : Insurance marketplace where brokers who represent their clients with insurable risks deal with Lloyds underwriters in turn representing investors; investors are grouped in syndicates providing capital for risk insurance
LOADING : Amount that needs to be added to pure premium for profit, expenses, and contingency margins
LONG-TERM CARE : Continuum of broad ranged maintenance and health services to chronically sick, disabled, or retarded; services can be provided in-patient (nursing home, rehab center, mental hospital) or outpatient or at home basis
LONG-TERM DISABILITY INCOME INSURANCE : Insurance cover issued to employer group or individual for providing reasonable replacement of part of employee’s earned income lost due to serious and prolonged sickness or injury during normal work
LOSS : Occurrence of an event that is payable through insurance
LOSS ADJUSTMENT EXPENSE : Expenditures incurred during the process of defending, paying, and evaluating claims
LOSS CONTROL : Conscious action to decrease the frequency, unpredictability, or severity of accidental loss/es
LOSS EXPENSE – ALLOCATED : Handling expenditures like adjuster fees or legal charges paid by insurers for settling claim/s that are definitely chargeable to the specific claim/s
LOSS EXPENSE – UNALLOCATED : Salaries and other costs incurred for the operations of the claims department of an insurance company that cannot be charged to any specific claim/s
LOSS PAYABLE CLAUSE : Protecting mortgagee’s interest in property by directing insurance company to make a loss payment to the mortgagee in case of any loss
LOSS PREVENTION : Any measure for reducing frequency or possibility of particular loss but does not eliminate completely all possibilities of loss
LOSS RATIO : Ratio calculated through division of claims in premiums; can be calculated in different ways using paid premium or earned premiums and the use of paid claims without or with modifications in claim reserves and without or with modifications in active reserves
LOSS RESERVE : Amount set up as the estimated cost of any claim
LOSS RESERVE DEVELOPMENT : The latest estimate of an insurer’s claim obligations compares for an earlier projection
LUMP-SUM DISTRIBUTION : Payment within one taxable year of the complete balance payable to any employee from a trust that forms part of qualified pension or employee annuity plan on account of the demise of that individual separate from attainment of 59 years or separation of service
LEASEHOLD INSURANCE : Insurance cover for tenanted property leased against loss of value of lease or profit through sub-lease by terminating the lease by insured peril or fire
LESSEE (LEASEE) : Party in whose favor lease is granted
LESSOR : Party that grants the lease to the leasee
LOCATION CLAUSE : Used in cargo open policies limiting underwriters’ liability in a single location
LOSS OF USE INSURANCE : Insurance cover against loss due to the inability of using the property due to damage or destruction
LOSS OF HIRE INSURANCE : Marine insurance policy designed for paying for continued expenses and profits loss to ship owners while unable to function post claim/s; implies providing the means to pay for the loans, premium on insurance cover/s, key clerical employees, essential crew, captain, and other expenditures
Glossary on General Insurance Terms starting with M
MACHINERY BREAKDOWN INSURANCE (MACHINERY INSURANCE) : Insurance cover for plant and machinery providing protection against all types of accidental mechanical and electrical breakdowns because of internal or external factors; cover is available when machine is operational, at rest, being dismantled and overhauled, subsequently re-erecting in the same premises; principal exclusions are perils that are covered under standard fire and special perils policy, willful negligence, gradual deterioration, and war; terms, conditions, and rates are governed through tariff
MADE GOOD AMOUNTS : Related to general average refers to property value that has been sacrificed as a portion of general average measures payable to the cargo owner from general average contribution made by all whose property or other interests are saved
MAILING LIST : Compilation of probable clients prepared as a list that can be used for solicitation through direct mail
MUMBAI : With relation to All India Motor Tariff is the area covered under the municipal corporation of Greater Mumbai and all areas up to and including panchayat/municipal limits of Thane, Panvel, Dombivli, Kalyan, Bhiwandi, Virar, Bassein, New Mumbai including CIDCO (City and Industrial Development Corporation)
MAINTENANCE WARRANTY : Warranty incorporated within the EDP Equipment Insurance Policy warranting existence of service or maintenance contract with computer makers
MAJOR PORT TRUST ACT, 1963, – LIMITATION : According to Section 120 no suit or proceeding can be initiated against a Board for one month after the notice has been given or six months post the accrual of cause of action
MALICIOUS DAMAGE : Deliberate damage or destruction of insured property or any part of it by wrongful act of an individual or individuals; cover against malicious damage is covered under the standard fire and special perils policy as component of riot, strike, malicious and terrorist damage cover; such coverage is also available under marine cargo insurance and inland transit insurance
MALPRACTICE : Improper conduct of professionals during performance of his or her duties either intentionally or carelessness or ignorance; unskillful or negligent performance where professional skills are mandatory
MALPRACTICE INSURANCE : Cover for professionals like lawyers or doctors against liability claims resulting from alleged malpractice during the delivery of professional services
MANAGED CARE : Healthcare systems integrating financing and delivering of appropriate healthcare services to covered persons through arrangement with specific providers for furnishing comprehensive set of healthcare services
MANIFEST : Statement prepared by ship’s master of the cargo being carried in the ship, document is used for comparison in the event of short landing of cargo either in totality or partially or details of all cargo in the event of complete destruction of the vessel due to maritime peril; copy is retained on board for identification of cargo if the need arises
MANUFACTURERS STOCKS : Comprises raw materials, finished goods, and stock in process
MANUSCRIPT INSURANCE : Cover suitable for specific requirements of an insured when standard policy is unable to meet these needs
MARGINAL WELL : Related to energy risks, ship that nears depletion of the natural resource to such an extent that profit from continued production is doubtful
MARINE 50/50 CLAUSE : Special clause related to project insurance plans where marine portion is not insured with the same company; clause provides the insured must undertake inspection of all packages comprising project materials when these arrive on site for any possible damages sustained to these while in transit as these may have been excluded from project insurer’s liability; further provides that in case of such inspection/s not being possible immediately at the time of arrival and damages are discovered later when the cargo is taken for erection liability for these damages is to be shared 50:50 between the marine cargo insurance provider and insurance company providing erection all risks policy
MARINE ADVENTURE : Voyage or time period when the cargo is exposed to the various maritime risks
MARINE CARGO INSURANCE POLICY : Insurance related to merchandise and/or goods in transit from one location to another by sea, rail, air, road, or registered post under the relevant carriage contract
MARINE CLAUSE : Clause appearing as one of the general conditions within the standard fire and special perils policy; by this clause insurance company is not liable for damages or loss to insured property in case the property at the time of the accident resulting in loss is covered under marine policy that includes peril that caused the damage/loss except for excess over the recoverable loss under the marine insurance policy
MARINE HULL INSURANCE : Insurance offered to ocean going steamers and other ships; hull insurance offers cover to the hull and machinery of the vessel and the materials and outfit and stores and provisions for officers and crew; policy also provides coverage for liabilities; plans issued for covering freight losses to owners and disbursements (amounts spent by vessel owner for fitting out the ship including stores and provisions); further policies are issued for covering vessels under construction
MARINE INSURANCE : Related to insurance of goods in transit from one destination to another by sea, inland waterways, air, road, or rail; ships covering damages or losses to hull or machinery and owner’s various liabilities and interests; and freight at the risk of the carriers
MARINE INSURANCE ACT, 1906 : Act came into being in the United Kingdom on 1st January 1907 and codified the laws related to marine insurance and now forms the basis of marine insurance principles; Indian counterpart of this Act is the Marine Insurance Act, 1963
MARINE INSURANCE CERTIFICATE : When open cover is issued for providing automatic and continuous insurance protection to regular importer or exporter engaged in international trading is expected to declare details of every shipment coming within the jurisdiction of open cover as and when the shipment would occur and particulars are available; as open cover is an agreement between insured and insurance company and not stamped document, insurer will issue particular stamped certificate against every declaration after gathering relevant premium on the individual declarations; at times insurance companies provide stamped policy for individual declaration instead of the certificate and this document is legally valid for any legal purpose
MARITIME CONVENTIONS ACT, 1911 : Act providing that in case of collision between two ships the amount of blame for the respective vessels involved in collision must be fixed in order that the liability of one vessel to other can be accurately assessed; does not regulate personal injury liability or loss of life
MARITIME FRAUD : Occurs when one or more of several parties in any transaction connected with maritime adventures, acting in collusion, unjustly or illegally in procuring money or goods from another related to in the carriage, financial obligations, and trade mainly in the form of cargo thefts, scuttling of ships, frauds in chartering, or documents frauds
MARKET PENETRATION IN GENERAL INSURANCE : Marketing technique used by insurance company for increasing sales of certain product offerings within an existing market through vigorous strategies; extent to which specific product or certain products are acquired in particular markets
MARKET RETENTION : Extent of capacity that is available within the local market for accepting the risk
MARKET SHARE : Percent share of a firm in the total sales within the entire industry related to all the marketed products in the different operational areas or specific product, specific location of operation, etc.
MARKET VALUE : Value determined for similar property that could be sold or purchased in the local markets; for insurance industry market value is determined post deduction of the appropriate value for the depreciation based on its age, use, maintenance, and wear and tear from the current value
MARKETING : Procedure for optimizing use of various resources of an enterprise by trying to identity and satisfy the requirements of the clients, potential as well as actual; in the most beneficial way for the organization
MARKETING AND DISTRIBUTION RISKS : Failure of the firm to sell products at not below the planned rate due to competitive undercutting strategy or introduction of improved products; modifications in the trends, and consumer tastes, political moves, or economic conditions etc.
MASS COMMUNICATION : Usage of widely circulating media like television, newspapers, radio, and magazines for providing information to general public
MASTER POLICY : Policy issued to employer or trustee or society or association for the establishment of group insurance policy for the designated members within an eligible group
MATERIAL DAMAGE : Physical damage to tangible property, such as stocks, building, automobiles, furniture, machinery, household items etc. that result in decreasing the intrinsic value of the said property
MATERIAL DAMAGE PROVISO : Every fire policy (CL) should include proviso stating that there shall be in force insurance cover for the insured’s in the property at the premises against such damages; and payment will be made or liability admitted under such coverage; however, such proviso is not applicable to property where the insured has no direct insurable interest
MATERIAL FACT : Fact/s that will influence the judgment of any prudent insurance company in determining whether to accept the risk and if so then the rate of premium, terms and conditions, and other related decisions
MATERIAL MIS-REPRESENTATION : Misrepresentation of certain facts that will influence the judgment of the insurance company with regards to assumption of the risk, premium rates, and other terms and conditions
MATERIAL REPRESENTATION : Representation to the insurance company that would affect the acceptance of risk or premium rates
MATE’S RECEIPT : When export goods are directly handed over to the ship’s captain or assistant (Mate) a receipt is issued known as Mate’s Receipt; the receipt is subsequently exchanged for Bill of Lading issued on the shipping company’s behalf
MAXICAB : Motor vehicle adapted or constructed for carrying more than 6 passengers but under 12 excluding the driver, for reward or hire
MISREPRESENTATION : Incorrect statement made about material fact/s if made deliberately with an intent to deceive can cause insurance contract to become void
MAIL ORDER INSURER : Kind of insurance company selling policies via mail or other mass media eliminating the requirements for agents
MAJOR MEDICAL EXPENSE INSURANCE : Form of health insurance policy providing benefits for most kinds of medical expenses up to a maximum limit; such plans may comprise internal limits and are subject to coinsurance
MALINGERING : Practice of feigning sickness or inability to work for collecting benefits under insurance policy
MANUAL RATE : Premium rate developed for group insurance cover from the standpoint of the company’s standard table generally referred to as rate manual or underwriting manual
MANUSCRIPT POLICY : Plan developed for meeting the specific requirements and needs of the company
MARITAL DEDUCTION : Reduction in estate for taxation purposes that is available if descendent is survived by spouse; can be as large as elected by the administrator or executor as long as the value does not exceed that of the qualifying property passing to the surviving spouse
MARKET PRICE (OR MARKET VALUE) : Rate at which security can be sold or brought at any particular period in time
MASS MERCHANDISING : Plan for insuring individual members within a group like company employees, labor union members, under single insurance cover at lower premiums, property and liability insurance is sold to individual members using group insurance marketing techniques
MASTER POLICY (OR MASTER CONTRACT) : Policy issued to group holders settling the provisions of the group insurance cover; insured individuals are provided insurance certificates
MAXIMUM FAMILY BENEFIT : Largest sum under social security that can be paid to a family
MCCARRAN-FERGUSON ACT : Federal law passed in 1945 stating continued regulation of insurance industry by the various states is in public interest and federal antitrust laws are applicable to insurance only to the extent of the industry and not regulated by laws of the state
MEDICAID : State programs for public assistance for individuals whose resources and income are insufficient for paying for healthcare; title XIX of federal social security act offers matching federal funds for funding the state Medicaid programs effective from 1st January 1966
MEDICAL EXAMINATION : Examination given by qualified physicians for determining insurability of applicants; medical exam is also used for determining whether insured claiming disability is actually disabled
MEDICAL EXPENSE INSURANCE : Form of health insurance plan providing benefits for expenditures incurred for medical care; this kind of insurance offers benefits for physician expenditure, nursing, hospital, and other related services and supplies; these benefits are related to actual costs, specific amounts, or rendered services; this kind of policy may sometimes include benefits for preventing and diagnosing and the treatment
MEDICAL MALPRACTICE : Inaccurate treatment or care by medical professional, hospital, or other healthcare service providers
MEDICAL PAYMENTS INSURANCE : Cover available in different liability insurance plans where the insurance provider agrees to reimbursing insured and others without regard to the insured’s liability for funeral or medical expenses incurred due to bodily injury or accidental death under specific conditions
MEDICARE : Program of hospital insurance (part A) and supplementary medical insurance (part B) protection offered under the social security act
MEDIGAP : Term at times applicable for private insurance products that are supplementary to Medicare insurance benefits
MINIMUM BENEFITS : Provision providing minimum amount of annuity to be paid if regular benefits formula calculates a lower amount; minimum is usually paid only when certain service requirements are adhered to at the time of retirement
MINIMUM GROUP : Least number of employees permitted under the state laws for effecting group for insurance purposes; the objective is for maintenance of some kind of appropriate division between individual policy insurance and group plans
MINIMUM PREMIUM PLAN (MPP) : Arrangement under the insurance service provider for a fee offers to handle administration of the claims and insure against large claims for self-insured groups
MISCELLANEOUS EXPENSES : Expenditures related to hospital insurance, charges (excluding room charges), and board like X-ray, medications, lab fees, and other ancillary charges
MISCELLANEOUS HOSPITAL EXPENSE BENEFIT : Provision in hospital expense plan offering payment of benefit for expenditures for required hospital services and supplies during the period of confinement; commonly covered expenses include x-rays, lab tests, medicines, anesthetics, surgical dressings, and using the operation theater
MODE OF PREMIUM PAYMENT : Frequency of payment of premiums, can be monthly, quarterly, half yearly, or annual
MONEY PURCHASE PLAN : Pension plans designed in such a way where the sponsor is obligated in clearly defined terms of the contribution made on behalf of the employee/s
MORAL HAZARD : Hazard resulting from any non-physical personal feature of a risk that increases the probability of loss or increase severity of loss; for example bad habits, poor financial standing, or low integrity
MORBIDITY : Incidence and severity of illness and accidents in well-defined class or classes of individuals
MORBIDITY TABLES : Actual statistics depicting frequency and duration of the disability
MORTALITY TABLE : Table showing number of members in a group commencing at certain age will be alive at every succeeding age; used for calculation of probability of dying or surviving through any time period and for valuing the annuity; to be appropriate for specific group must be based on experience of individuals with common characteristics like occupation or gender
MULTI-EMPLOYER PLAN : Plan according to collective bargaining agreement where contributions are made by more than one employer, under ERISA at the commencement of the plan no single employer can contribute up to 50% of the total and thereafter can go as high as 75%; employee may change the employers within the group without losing the retirement benefits unless there is break in service canceling credits earned prior to the break
MULTI-PERIL POLICY : Package plan that offers protection against number of different perils; multi-peril policies are not necessarily multiple lines of products since combined risks may be within one line of insurance
MULTIPLE EMPLOYER TRUST (MET) : Legal trust established by plan sponsor bringing together several small unrelated employers with the objective of offering group medical cover on insured or self-funded basis
MUTUAL INSURANCE COMPANY : Insurance service provider where the control and ownership is vested with the policyholders and some portion of the surplus earnings may be returned to them as dividends; no existence of capital stocks
MALICIOUS DAMAGE CLAUSE : Clause published by Institute of London Underwriters for using in cargo insurance subject to Institute Cargo Clauses B or C; adds risks of malicious acts, sabotage, or vandalism to the cargo policy
MANUAL RATES : Published rate for some form of insurance
MAR POLICY : Market terminology for marine insurance policy used by Lloyds and London company market; basic form of contract where conditions agreed by the insurance providers subscribing to the marine insurance contract are attached
MARKET VALUE CLAUSE : Provision used for property damage insurance covering some risks that obligates insurance providers in case of loss to pay the established cash selling price of damaged or destroyed stock instead of the actual value providing by the standard fire policy
MINIMUM PREMIUM : Smallest premium amount that insurance providers will accept for writing specific policy or bond for the pre designated time period
MITIGATE : To reduce the severity or adopt steps for eliminating further damage after the occurrence of the loss
MORTGAGE INSURANCE : Life insurance plan paying balance of the mortgage amount in case of death of the insured (mortgagor)
MORTGAGEE : Person loaning money to another and taking property as the underlying security in exchange for the loaned amount
MOTOR TRUCK CARGO – OWNER’S FORM : Form of insurance insuring truck owner/s against loss to his personal property or damages due to legal liability arising from being a carrier while transporting property belonging to another; no liability for loss that is not legally his
MOTOR TRUCK CARGO – TRUCKER’S FORM : This kind indemnifies the policyholder/s (trucker) for damage or loss resulting from legal liability as a carrier while transporting property of another; no liability for losses that are not legal
MYSTERIOUS DISAPPEARANCE : Disappearance of insured property in an unexplained and mysterious manner
Glossary on General Insurance Terms starting with N
NAMED INSURED: Industry, individual, organization, or firm in whose favor and name the policy is issued
NAMED PERILS POLICY : Policy where the perils against which cover is granted is listed; insurer is liable for making good losses incurred due to these named perils
NATIONAL WEALTH : Sum total of the value of the entire capital and goods available in a country
NATIONALIZATION : Takeover of the assets of private company or its operations by the government; compensation may or may not be offered
NATIONALITY OF VESSEL : Nationality of vessel is critical to the insurance company especially when the ship sails under “flag of convenience” as the owner would not prefer to extend the coverage on the shipped cargo through these vessels and insert the warranty to the open cover or policy
NATURAL GAS : Mostly methane at times can be ethane with minor quantities of entrained heavier fractions like butane, propane, etc., these and others are easily condensed from natural gas flow and are referred to as natural gas liquids and are different from liquid natural gas that is ethane or methane refrigerated under pressure to its liquid state
NATURAL LOSSES : Damages or loss caused due to natural vagaries like hurricane, storm, earthquake, lightning, etc.
NATURAL RESOURCES : Potential and actual forms of wealth provided by nature like oil, coal, arable land, and water power
NAVIGATIONAL LIMITS : Limits prescribed by the Port Authorities and Director General of Shipping with respect to area of operating the vessels that depends on factors like size, type, and nature of the ships; insurance policies also fix area limits for operation of the ships based on their uses
NCDRC : National Consumer Disputes Redressal Commission; complaints can be filed with NCDRC by any aggrieved insured against the insurance company when the claim amount is over INR 20 lacs; territorial jurisdiction of the commission is entire the country, appeals against the orders of any state consumer disputes redressal commission can also be filed with this authority
NEGLIGENCE : Failure of using reasonable care adopted by prudent individuals under similar conditions or situations
NEGOTIABLE INSTRUMENT : Title document for the property that is transferable from one individual to another during the normal course of business
NEGOTIATED SETTLEMENT : Claim settlement reached after compromising in cases where dispute with relation to liability or quantum of the payable loss exists but compromised disposal is more desirable for mutual interest
NEON SIGN INSURANCE : Insurance cover for damages or loss to neon sign installations by any external accidental reasons or theft, fire, explosion, or lightning; insured’s liability to 3rd parties due to accidental damage to insured neon sign is also covered with this plan
NET LOSS : Residual loss to the insured after considering realization from salvage and/or recoveries from 3rd parties but this salvage and recoveries are not considered net of expenditures incurred for their realization
NET PREMIUM : Portion of the premium that is designed to provide coverage for benefits or losses payable under the insurance policy; but not various expenses; part of this premium is retained by the office after deducting the expenses for management and includes commission paid to agents
NET PREMIUM WRITTEN : Total premium written by any ceding firm after reducing premium ceded to the reinsurance company
NET PROFIT : Net trading profit after excluding capital receipts and accretions and outlays that are chargeable towards capital; is determined after providing for standing charges but before deductions of taxes; loss of profit plan provides coverage for loss of net profit and insured standing fees during the time of interruption to the production resulting from damage in insured premises due to insured peril/s
NET RETAINED LINE CLAUSE : Clause that is applicable to excess of loss reinsurance coverage that refers to protection offered by the cover only for retained net line account of the reinsured; net account may be inclusive of normal any single risk retention according to reinsurance program or unplaced share of proportional treaty post retention; according to this clause excess of loss coverage excludes second term
NET RETAINED LINES : Related to excess of loss reinsurance treaties is provision that the contract is only protecting some portion of the insurance that is retained by the reinsured to the net account; treaty does not offer protection if one of the proportional reinsurance provider/s under the treaty is not willing to settle its related share of loss under the contract and because of this reflects back as liability that is to be borne by the reinsured
NET RETENTION : Capacity that insurance companies put forth for retaining risks to its own account without any need for reinsurance
NET TONNAGE : Cargo and/or passenger accommodation expressed in terms of cubic measurements depending on 100 cubic feet equaling one net registered ton
NET WORTH OF THE COMPANY. : Indicating excess of assets over liabilities of the organization that in turn implies sum of preference and equity capital and free reserves such as general reserves of the firm
NEW ATTACHMENTS : Acquisition of new vessels to existing fleet; rate of premium of these new assets depend on the experience of the fleet and factors like registered tonnage, sum insured, type, trading limits of individual ship, age, etc.; premiums for ships are based on trading limits chosen by owners like port limits, worldwide, or limited trading
NEW BUSINESS CLAUSE : Special clause included to specification in loss of profit insurance plan; when insurance is arranged for new business where no historical performance numbers are available the clause amends definitions of gross profit rate, standard turnover, or annual turnover for expanding turnover from start of business until date of damage for giving proportionate figures for 12 months.
NO CESSION WITHOUT RETENTION : Condition in reinsurance contract that states ceding company should retain some portion of the risk and reinsurance the remaining; contract will not permit reinsurance for one hundred percent of the risk/s; primarily acts as a safeguard to the interest of the reinsurer for ensuring bad risks are not completely assumed by the reinsurance company
NO CLAIM BONUS : Reduction as a percent in the manual or prospectus premium while renewing the policy depending on favorable claim experience during the previous year or policies for same insured property against same risks
NO CLAIM REFUND : Part of agreed premium in the policy that must be refunded to the insured in case of no claim being paid or reported in the entire policy duration; customary for insurance companies to link it with the policy renewal for ensuring renewal without gaps
NO CURE, NO PAY : Terminology used with relation to salvage operations of cargo or vessel in distress; salvage award payable to the saver in on No cure No pay basis meaning s/he is entitled to receive the reward only when and if property is salvaged; recovery agents pursuing recoveries from carriers to handle given assignments offered by insurance providers on this basis where claim fee when some amount is recovered from carriers
NO FAULT LIABILITY : Claimant does not require proving that injury, death, or damage has occurred due to negligence, wrongful act, or default of an individual; relief provided under these acts are under “no fault liability”; motor vehicle act with regards to road accidents, public liability insurance act, and workers compensation act
NO KNOWN OR REPORTED LOSS : Condition sometimes stipulated by insurance and/or reinsurance providers that base the acceptance of proposals subject to no reported or known loss for subject matter proposed for insurance or reinsurance on the acceptance date
NOMINEE : Institution, firm, or individual mentioned in accident insurance plans to be the beneficiary of the benefits in case of demise of the insured due to an accident
NON – PERFORMING ASSETS : Refers to investments classified as non-performing assets (NPA) according to company accounting policies; RBI provides detailed guidelines on how to and when an investment is considered as NPA in relation to non-payment of debenture or loan when due or interest non-payment on these on due date; amount provided for such cases as per RBI guidelines are applicable to financial institutions and banks; insurance companies may opt to follow these guidelines and provide these in their accounting books
NON DESTRUCTIVE TESTING : Testing of any component without destroying or damaging it in actuality
NON FARE PAYING PASSENGERS : Provision within motor insurance commercial vehicles plans for covering in respect to commercial automobiles that are unauthorized to carry fare paying passengers or individuals related to specific journey to travel on paying an additional premium amount
NON HAZARDOUS : Physical or chemical properties of matter in whichever state that presents no undue exposure to the peril in question; normally premium rates are lowest for such goods
NONASSIGNABLE POLICY : Insurance plan that cannot be assigned by an insured to any other person; normally liability and property policies are not assignable
NON-CONCURRENT POLICIES : Two or more insurance plans that cover portion of the property covered by other policies or those that include uncovered properties of others; some property may be common to all
NAMED PERILS : Coverage within property insurance providing protection against loss from perils specifically listed in the contract that are not physical in nature, such as fire, storm, smoke, theft, etc.
NATIONAL ASSOCIATION OF INSURANCE COMMISSIONERS (NAIC) : Association of insurance commissioners in different states for promoting national standardization in insurance regulation
NO-FAULT AUTOMOBILE INSURANCE : Kind of insurance in which an individual’s financial loss due to an automobile accident are paid by his or her insurance company irrespective of whose fault caused the accident
NON-ADMITTED INSURANCE COMPANY : Insurer that is not licensed for conducting business in specific state/s like an organization; however, it may sell surplus or excess insurance in these state/s if licensed insurance providers due not have the capacity or expertise
NONCANCELLABLE : Contract that insured has to continue through timely premium payments as set forth in the contract; until at lease s/he reaches the age of 50 years, or if insurance is issued after age of 44 years for a period of 5 years from issue date during which time the insurer has no right to make unilateral any modifications to any provision of contract while in force
NONCANCELLABLE GUARANTEED RENEWABLE POLICY : Individual plan that insured individual has to continue until specific age (65 years) through timely premium payments; insurance company cannot make changes in any policy provision while it is in force
NONCONFINING SICKNESS : Illness that disables the covered individual but does not confine her or him to the home or hospital
NONCONTRIBUTORY : Term applicable to employee benefit plans whereby the employers bears full cost of benefits on behalf of the employees; 100% of eligible employees need to be insured
NONDISABLING INJURY : Injury that may need medical care but does not result in loss of income due to lost working time
NONDISABLING INJURY BENEFIT : Benefit within certain disability income plans offering payment of medical expenditures incurred for treating injuries that require such care but do not leave the injured completely disabled
NONFORFEITURE OPTION : One of the options available in case the holder discontinues paying the premium on insurance plan with cash value; this if any may be taken in cash in the form of extended insurance or decreased paid-up insurance
NONMEDICAL LIMIT : Maximum face value of insurance plan that a firm will issue without having the applicant undergo medical examination
NONOCCUPATIONAL POLICY : Contract that insures an individual against off-the-job illness or accident; does not provide cover for disability due to such incident covered under workers compensation plan, group insurance, and sickness policies that are often non-occupational
NONPARTICIPATING INSURANCE : Insurance plan whereby the insured is not entitled to any share in the dividend distribution of the company
NONPARTICIPATING POLICY : Life insurance plan where the organization does not distribute any portion of its surpluses to the holders; premiums are lower than those compared to participating insurance plans; some nonparticipating policies have maximum premium and current reduced premium; current premium reflects anticipated experience more favorable than what is being guaranteed by the firm; and may be charged from time to time for entire business to which the plan belongs to
NONPROFIT INSURERS : Individuals under special state regulations for providing hospital, dental, and other medical insurance on non-profit basis; laws offer tax exemption for some taxes
NOTICE OF LOSS : Written notice of losses incurred by insurance companies as stipulated in the conditions of the insurance plan
Glossary on General Insurance Terms starting with O
OBSOLESCENCE : Procedure whereby the property becomes unusable not due to physical deterioration but due to modifications outside the property, like technological or scientific advances
OCCUPANCY AND FIRE RATES : Direct relation between use of premises that it is put to and the possibility of its exposure to fire; occupancy of building is primary factor for determining the fire cover premium rate
OCCUPATIONAL DISEASE : Disease contracted due to exposure to certain harmful conditions on the job; coverage for these is available under workers compensation plan
OCCUPATIONAL HAZARDS : Occupations that expose the insured to physical damage that is larger than normal due to nature of the work and the difference periods of absence from the occupation due to expected disability
OCCURRENCE : Event resulting in bodily injury or property damage to any third party; for liability insurance plans all claims for such injuries or damages relating to 3rd parties arising from one event is treated cumulatively while applying the insurance company’s maximum liability related to the single occurrence
OCCURRENCE BASIS POLICY : Liability insurance plan covering claims that arise due to any event/s during the policy duration irrespective of when these are filed
OCCURRENCE LIMIT : Maximum liability of the insurance company of all claims that are related to the occurrence of a single event
OFF DUTY COVERS : Personal accident insurance coverage for individuals during restricted hours when s/he is not at work or on official duty; premium charged for such policy is 50% chargeable for 24-hours coverage
OFFER : Manifestation of willingness for entering into a contract or agreement
OFFER AND ACCEPTANCE : An essential element in contracts for making these legally binding; applies to insurance contracts too; contract is completed by the acceptance of one party of an offer made by the other party
OPEN COVER : Agreement where the assured undertakes to declare each item that is within the scope of the coverage in the order in which the risks are attached; at the time of concluding the contract insurance company agrees to accept all valid declarations to pre-agreed limit for every declaration; it may be open for certain period or forever based on the cancellation clause
OPTIONALLY RENEWADLE CONTRACT : Health insurance contract where the insurance provider reserves termination right of the coverage at any time or in certain cases at the time when premium is due but has right for terminating cover between such dates
OCEAN MARINE INSURANCE : Insurance cover for sea-going vessels including all liabilities related to these and the cargoes
OPERATING RATIO : Sum of expenditures and losses expressed as certain percentage of the earned premiums
ORDINARY LIFE : Same as straight or whole life; terms are applicable to policies that continue during the entire life of the insured and providing the insured amount at the time of demise
OVERHEAD EXPENSE INSURANCE : Special health insurance plan designed for helping the offset of overhead expenditures like rent, utility bills, employees’ salaries, auditors’ fees incurred during disability; monthly payments during this period is not fixed as an amount of indemnity on regular disability insurance; but is the actual overhead amount incurred or percent thereof up to specified limit in the insurance contract
OVERHEAD INSURANCE : Method of purchase and sale of securities that are not listed on public stock exchanges, negotiated through computers or telephonically
OVER-THE COUNTER MARKET : Commission payable to general agents or agencies’ managers that is in addition to the commission paid to soliciting broker or agent
OBLIGEE : Any person in whose favor an obligation runs; term is often used in surety bonds where it refers to an individual, corporation, or firm protected through the bond
OBLIGOR : Also known as principal, an individual bound by obligation; under bond strictly implies both principal and surety as obligors
OCCUPANCY : Type and character of the usage of the property in discussion
OVERAGE : Additional chargeable premium on cargo open cover declaration due to the carrying vessel
Glossary on General Insurance Terms starting with Q
QUALIFIED NURSE : Related to medical insurance means an individual holding a certificate from recognized nursing council and employed on the recommendation of attending medical practitioner
QUARANTINE RESTRICTIONS : According to carriage of goods by sea act, carrier does not have the responsibility for loss of cargo arising from vessel carrying cargo that is subjected to certain imposed restrictions by health authorities in the countries involved; however, cargo insurance provider considers it as a delay beyond the control of insured and pays the claims for damage or loss to cargo when it is due to an insured peril
QUARRELS AND ARBITRATION : Arbitration clause provides the mechanism that must be followed for settlement of any disputes, quarrels etc. that may arise in reinsurance contracts
QUID PRO QUO : Insurance company selling policy to some person for consideration of premium paid by the insured
QUOTA SHARE CUM SURPLUS TREATY : Proportional treaty arrangement mechanism combining quota share and surplus treaties; as an example risk can be ceded on quota share basis of 50:50 between reinsured retained and quota share insurer; reinsurer can be protected further by surplus treaty after fixing retention line of reinsured
QUOTA SHARE POOLS : Market pools arranged on the quota share principle where the participating companies provide quota share cessions and thereafter share the complete business as per their participation percent
QUOTA SHARE TREATY : An agreement where the ceding company is bound to cede and the reinsurance company must accept a fixed percent of each risk accepted by ceding company
QUALIFICATION PERIOD : Period during when the insured should totally be disabled prior to being eligible for residual disability benefits
QUALIFIED IMPAIRMENT INSURANCE : Kind of substandard or special class insurance that restricts benefits for insured individual’s particular condition
QUALIFIED PLAN : Plan that the IRS approves as meeting the requirements of Section 401 (a) of the 1954 Internal Revenue Code; these plans have certain tax advantages
QUALIFIED TERMINABLE INTEREST PROPERTY : Category of property created by the Economic Recovery Tax Act that under dead spouse’s will entitles surviving spouse to receive all the income on the said property for life and the income should be payable at least once in a year and precludes any person including spouse from appointing property to any other individual during spouse’s lifetime
Glossary on General Insurance Terms starting with R
R.C.BOOK : Registration certificate of vehicle confirming the ownership; indicative of insurable interest on the part of the insurance proposer; verified by the surveyor or insurance company in the event of an accident related to the insured vehicle
R.I.V. POLICY : Reinstatement value policy; standard fire and special perils plan including reinstatement clause where building, plant and machinery, or other fixed asset/s are covered for replacement or reinstatement cost allowing the indemnification of the insured in case of loss for the replacement cost or reinstatement with similar property when new as on date basis, indemnity principle is modified some to provide compensation to insured for new in place of old
RATABLE PROPORTION OF LOSS : Treating claim for loss that is insured under more than single policy; in such instances settlement is made by every insurance provider for only its portion of the loss that is determined on the basis of the sum assured bearing to the proportionate amount to the total of all involved policies
RAM : Related to energy risks, closing and sealing component on blowout preventer
RAM BLOWOUT PREVENTOR : In relation to energy risks, blowout preventer that uses Rams for sealing off pressure on any hole with or without pipe also called ram preventer
RATE GUIDE : Company prospectus or manual providing rates of premium for different kinds of insurance coverage related to an individual, peril, or property; furnishes rates for all insurance plans excepting ones that are subjected to tariff; it is primarily intended for agents who solicit business and comprise guidelines for business procurement
RATE OF EXCHANGE : Price of one currency in relation to that of another
RATE OF GROSS PROFIT : Gross profit as a percent of total turnover; related to consequential loss policy, it refers to rate of gross profit earned on the turnover in a financial year preceding the date of the loss appropriately adjusted for business trends
RATE OF PREMIUM : Pricing factor on which payable premium for particular kind of insurance cover is based
RATE ON GNPI : Related to excess of loss reinsurance is the premium for the excess loss cover expressed as percent of gross profit net premium
RATE ON LINE : Related to excess of loss reinsurance is the premium for the excess loss cover expressed as percent of the limit of excess of loss coverage for any single loss making event
RATE PER MILLE : Premium rate calculated for every thousand rupees of sum assured
REPATRIATION BENEFITS (UNDER OVERSEAS MEDICLAIM) : Coverage for medical necessity for evacuating to medical facility, medically equipped flights to return home, or repatriation of mortal remains to the insured’s primary residence
RISK : Possibility of loss also used for referring to insured or property covered with an insurance policy
RISK MANAGEMENT : Procedure to identify, analyze, and either accept or mitigate uncertainty
RATE : Rate of estimated value of future losses; predicted on historical experiences and considering the involved risks
RATED POLICY : Also known as extra risk policy is a plan issued at higher than the standard rate of premium for covering extra risk where an insured works in hazardous conditions or has an impaired health issue
REINSTATEMENT : Resumption of the cover under an insurance policy that has lapsed
REPLACEMENT COST : Cost for repairing or replacing property at construction costs prevailing when loss occurs; cost for rebuilding or repairing the property without taken depreciation into consideration
RATEMAKING : Statistical procedure whereby the insurance company determines risks and pricing for the basic kinds of insurance plans
RATING TERRITORY : Geographical grouping where hazards tend to equalize and permit the establishment of equitable rate for the territory
REASONABLE AND CUSTOMARY CHARGE : Charge for health insurance coverage that is consistent with the on-going charge or rate in specific geographic location for similar or identical services
REBATING : Providing valuable consideration often all or some part of the commission to the prospect or insured as inducement to purchase or renew; rebating is not allowed by law
RECURRING CLAIM PROVISION : Provision within health insurance plan that specifies the period of time during which recurrence of condition is considered to be continuation of previous period of disability or hospital confinement
REDUCED PAID-UP INSURANCE : Kind of insurance available as non-forfeiture option provides for the continuation of original insurance plan but for a lower amount
REGULATION : Supervision of business practices by government entity
REHABILITATION : Restoration of fully disabled individual to meaningful occupation; provision in certain long-term disability plans providing for continuation of benefits or financial assistance while totally disabled insured is restraining or attempting for resumption of productive employment
REIMBURSEMENT : Payment of expense actually incurred as a result of an illness or accident but not exceeding an amount specified within the policy
REINSURANCE : Assuming all or part of the risk undertaken by one insurance company by another insurance service provider called the reinsurer
REINSURANCE FACILITY : Alternative technique for servicing insured’s who cannot obtain insurance in the voluntary market; losses and premiums for business that has been ceded to the facility are pooled and all insurance providers share as per their proportion without considering depreciation
RENEWABLE TERM INSURANCE : Term insurance that is renewable at the end of the term at the option of the holder and without needing evidence of insurability for limited number of successive terms; rates increase at every renewal as age of the assured increases
RENEWAL : Continuance of the cover under an insurance policy beyond the original term through the acceptance of the premium for new policy form by the insurance company
RENTER’S POLICY : Package insurance plan including coverage that is similar to homeowners policy for covering personal property of renter or tenant in the building
REPLACEMENT : Substitution of health insurance cover from one policy contract to another
REPLACEMENT RATIO : Percent of income prior to retirement that is needed for replacing for maintenance of the same standard of living after retirement
REPRESENTATION : Statements made by applicants whereby they represent as being substantially true to the best of their knowledge and belief but not warranted as exact in all details
RESCISSION : Termination of insurance contract by insurance provider on the basis of material misstatement while applying; action of rescission should occur within the contestable period or time limit on certain defenses but comes into effect on the issue date making the contract void since its inception
RESERVATION OF RIGHTS : Arrangement whereby insurer defends a case without any commitment of providing coverage in case the facts disclosed during the trial reveal the occurrence as not being covered
RESERVE : Amount representing liabilities kept by an insurer for providing further commitments under the outstanding policies; amount allocated for special purpose; it is not a liability and an extra fund
RESIDUAL DISABILITY : Period of partial disability that immediately following a period of complete disability; benefits for residual disability are payable on pro-rata basis and are based on the percent of earning loss
RESIDUAL DISABILITY BENEFITS : Provision in insurance plan providing benefits in proportion to the decrease of earnings due to disability instead of the inability to work full time
RESIDUAL MARKET : System through which insurance is made available for buyers and represents unusually higher risks
RETENTION : Amount of risk that is retained by the insurance company for its own account or that of specified others but not reinsured
RETROCESSION : Procedure whereby reinsurer obtains reinsurance from another company
RETROSPECTIVE DATE : First date for which the claims are paid under claims-made policy of liability insurance
RETROSPECTIVE RATING : Rating procedure that allows adjusting the insured’s final rate depending on the insured’s own loss of the experience
REVOCABLE TRUST : Trust that can be terminated or revoked by the creator/s
RIDER : Document that modifies the policy; can increase or reduce the benefits, waive any condition/s or coverage, or in any other way modify the original contract
RIGHT OF SURVIVORSHIP : At the demise of one of the co-owner of the property that person’s interest in the property automatically passing to the surviving joint tenant/s
RISK CLASSIFICATION : Process through which company decides how the premium rates for life insurance must differ as per the risk characteristics of the individuals; factors include age, occupation, gender, health conditions etc.; these rules are applied for individual applicants
RISK CONTROL : Any conscious action that aims to lower the severity, frequency, or unpredictability of accidental losses
RISK POOLING ARRANGEMENT : Pooling arrangement
RISK RETENTION GROUP : Alternative insurance form whereby members of similar profession or business come together for self-insuring the risks
ROBBERY : Taking of property from an individual through force or threat of violence
ROLLOVER : Transfer of the IRA or any other qualified pension fund from one institution to another
ROTH IRA : Special kind of individual retirement account that an individual can contribute post tax; tax-free withdrawals are available after retirement
RUN-OFF COMPANY : Insurance provider being wound up or otherwise not underwriting business in any particular segment; thereby letting current insurance plans run to their dates of expiration
RATING BUREAU : Organization classifying and promulgating and in certain cases compiling data and measuring hazards of individual risks in relation to rates within given geographical territory
RECOVERY : Amount recovered from 3rd party/parties responsible for the loss on which the claims have been paid
REBATE : Reduction in the amount of the premium
REPLACEMENT CLAUSE : Clause that limits the liability of the underwriter for damage to machinery cargo
REPORTING FORM : Fire or direct damage cover written under policy covering fluctuating values of merchandise stocks, fixtures and furnitures, and improvements through periodic reports submitted to the insurer by the assured with annual adjustments of the premium on an average value
RETROACTIVE DATE : Date on “claims made” liability insurance plan that triggers at the commencement of the coverage; retroactive date is not needed if one is shown on the policy, and claim made during the period of the plan is not covered in case loss occurs prior to this date
Glossary on General Insurance Terms starting with S
SABOTAGE : Destruction of productive capabilities in factory or plant by those opposed to management; sabotage is malicious act and sustained losses to the insured arising due to such destruction are recoverable under the malicious extension agreement
SAFELY LANDED : Related to marine cargo insurance; goods are safely landed when these have been landed in the customary manner within reasonable period of time post arrival at destination
SAFETY AUDITS : System bringing together various methods to perception of risk and identification of operative cause and risks; defined as critical examination of industrial operation in entirety for identification of possible hazards and risk levels
SAID TO CONTAIN : Finding place in receipts given by all carriers in connection to entrusted goods for carriage from one location to another that are contained in cases or closed packages; it is responsibility of consignor or consignee for establishing to the satisfaction of carrier about description and quantity of goods in the packages when content shortage while in the custody of carrier is alleged by consignee during delivery
SAILING VESSELS : Country crafts propelled by wind power; either wooden or steel used for carrying cargo between Indian ports and between Indian ports and ports in countries close to India like East Africa, Sri Lanka, Persian Gulf, and Pakistan
SALE CONTRACT : Contract by which the seller and the buyer agree to the various terms and conditions for completing the sale
SALE OF VESSEL CLAUSE : Provision within institute hull clause providing automatic cancellation of policy in case of change in ownership of vessel or management; continued coverage if agreed by the insurance provider is done through an appropriate endorsement; in case of cancellation insured will receive pro-rata return on daily premium
SALESMANSHIP : Technique of persuading individuals to purchase any product or avail certain service/s
SALVAGE : Property partially saved from damage or loss; compensation paid for delivering salvage services under some contract
SALVAGE ASSOCIATION : Association governed by a Committee drawn from Lloyds and Company underwriters; primary activities comprise providing expert advice and supervision of salvage operations; surveying oil damages, undertaking damage and condition surveys for cargo and hull, site and layup surveys, preparing case for insurers when possible litigation exists, and supervision of towage, repairs, and voyage approvals
SALVAGE CHARGES : Cost incurred by 3rd parties independent of any contractual agreement towards salvage operations while saving a vessel under distress; salvage operations include towage, uprighting, refloating, or raising sunk vessel; salvage charges exclude expenses for services like those rendered by the insured or agents and would be treated as sue and labor charges or general average based on the situations
SELF-INSURANCE : Assuming financial risks instead of paying an insurance provider to assume these; every policyholder is self-insurer in relation to deductibles and copayments; specialized form of risk extension where firm is able to establish fund to pay for losses because it has group of exposure units sufficient to reduce loss and predict loss
SHORT TERM COVERAGE : Available for a maximum period of 6 months, short term coverage is used for procuring insurance between two jobs or graduates who are still not covered under group plan provided by employers
SHORT PERIOD POLICIES : Policy that is written for a period that is shorter than the average term
SHORT PERIOD RATES : Amount payable for procuring an insurance coverage for a period of less than one year
SUBROGATION : Legal procedure whereby insurance company after paying for the losses can seek recovery of the amount from another party that is legally liable
SELF-INSURED RETENTION : Amount in liability insurance plan the insured needs to pay prior to the insurance provider paying; unlike deductible this amount is paid directly to the claimant
SICKNESS INSURANCE : Health insurance form covering losses due to illness or sickness
SALVAGE LOSS : Occurs when the underwriter agrees for settling cargo claim by paying the difference between the insured value and realized proceeds through sale of damaged goods
SCHEDULE : List of amounts payable for surgical procedures, dismemberment, and ancillary costs in health insuranceplans; list of individual items covered under single plan like buildings, animals, and other property; for marine policies list is attached to slip, open cover, policy, or other document, often detailing premium rates for various journeys, risks, and interests
SCHEDULE OF LOSS : Notice completed by the assured documenting the damage or loss to personal property, contents, and/or stock
SEAWORTHINESS WARRANTY : Implied warranty in each policy stating the vessel must be sea worthy at the time of commencement of coverage or if undertaken in stages at every stage of the journey, ship should be reasonably fit in every way to combat ordinary perils encountered during sea voyage
SECURITY : Underwriters subscribing to risks; insurance service providers
SHORT-RATE : Cancelling insurance contract at the behest of the insured with refund of premiums to policyholder lower than would be provided under pro-rata basis
SOLVENCY : Adequate income and assets; primary responsibility of state insurance department for monitoring insuranceproviders licensed to offer such services within the state and ensure they remain solvent and have the capability to pay all the claims made by the policyholders
SPECIFIED DISEASE INSURANCE : Policy specifically designed for stated benefits often of larger amounts for treating disease/s listed in the policy
STOP LOSS : Provision within the policy for cutting off loss of the insurer at any point in time; examples aggregate and maximum benefits; kind of reinsurance that transfers loss from ceding company to reinsurance provider at a point of time
SUBROGATION WAIVER : Waiver named by the insured for giving up right of recovery against another party; generally insurance policies need subrogation rights to be preserved
SUE AND LABOR : Expenses incurred by assured and representatives with the objective of minimizing or preventing loss that is the liability of the underwriter; excludes expenses in salvage or general acts as these are recovered under the plan as underwriter liability for contributing towards general average or salvage; sue and labor charges can be recovered under insurance plans that incorporate such clause or in accordance with the policy wordings
SURETY : Describes business or bonds or surety ship; is an arrangement where one party is liable to 3rd party/parties for negligent acts of second party; party in this kind of arrangement holds responsibility to one person for the act of another person
SURETY BOND : Bond where the surety agrees to answer to the obligee for any non-performance of the principal/obligor
Glossary on General Insurance Terms starting with T
TAINTING : State of the cargo being soiled due to atmospheric conditions; for example arising because cargo is in close proximity where odors like orange tainting teas are prevalent
TALLY SHEET : Document made by the port trust officials that records description of cargo and number of packages as cargo lands from the ship; it also records when package does not land in sound condition known as landing tally and requisition by the insurance provider for import claim under the marine policy for verification whether the package that comprised the claimed item for landed in damaged condition thus indicating loss to have occurred while in the custody of the carrier
TANK CONTAINERS : Made from stainless steel with size of 8X8X10 and 4000 liter capacity used for carrying corrosive, toxic, inflammable, and dangerous chemical substances; these tank containers have the convenience of easier handling and complete adaptability to integrated transport systems for more effective volume loading and less costly than drums
TANK FARM : Area at the refineries, storage depots, or terminals that is dedicated to storage tanks and related safety requirements for the adjoining space and spillage containment devices
TANKERS : Liquid bulk cargo carriers that are strongly built for carrying liquid cargoes like petrol, oil, molasses etc. speed is between 10 and 15 knots and ply only on fixed routes, collision damage results in huge losses; risk of fire and explosion during discharging the cargo is higher with greater possibilities of pollution perils
TARE : Weightage of the packing in consignments or unlade weight in containers or vehicles
TARIFF RATE : Rate determined by tariff committee for specific property/properties and against specific peril/s that will have to scrupulously adhered to by the insurance providers; in most cases this fixed rate is the minimum that is chargeable in any condition allowing insurers to charge higher if the need arises
TAX TOKEN : Token issued by the RTO for having paid the required tax/es for the vehicle/s; strictly speaking payment or non-payment does not vitiate insurance contract and liability under the policy is not prejudiced
TAXYING (AIRCRAFT) : Includes all movement of aircraft under its own power other than for the flight purpose; taxying is not deemed to end merely due to temporary halting of aircraft during the course of taxying from one point to another
TEARING APART ON ACCOUNT OF CENTRIFUGAL FORCES : Insured equipment, machine, or apparatus splitting in fractions because of the force tending to pull it outward when rotating rapidly around the center; contingency is irrecoverable under explosion coverage part of the standard fire and special perils cover
TELEVISION INSURANCE : Insurance cover for TV apparatus and antenna as well as VCR against fire and allied perils; riot and strike and other accidental damage through external means, electrical, and mechanical breakdown, housebreaking, burglary, and theft; coverage is also provided against 3rd party liabilities of insured or loss to own property due to accidents caused through or by insured item; different premium rates are applied by insurance companies based on whether equipment is for personal or commercial usage and if let on rent
TEMPORARY TOTAL DISABLEMENT : Injuries or illnesses that prevent an individual from doing his/her normal duties for a limited period of time
THEFT : Any act of stealing
THIRD PARTY : Claimant under liability policy; because person making the claim is not among the insured or the insurance provider; third party claim is a demand made by any individual against the policyholder of another company and payment that will be made by the company
THE BILL OF LADING ACT,1855 : Parliamentary act detailing the rights of the merchant of goods, consignor, consignee, and other related parties
THE CARRIERS ACT, 1865 : Defines relationship between common carrier and any other person including association, body of persons whether incorporated or not
TORT : Legal term implying wrongful act due to injury or damage on which civil court action or proceeding may be based
TRAVEL ACCIDENT POLICY : Insurance cover for covering medical expenditures, trip cancellation, loss of luggage, flight accident, and other such losses during travel either in the insured’s own country or abroad
TREATY : Agreement between reinsurance provider and ceding insurer outlining the details of the reinsurance arrangement
TABLE OF MULTIPLES : Life expectancy figures provided by the Internal Revenue Service used while calculating exclusion ratio for life contingent annuities; separate tables offer figures for joint and last survivor annuities, annuities that comprise refund or minimum payment guarantees, and annuities paying quarterly, bi-annually, and annually
TAX BASIS : Cost from which the profits or losses are determined for income tax requirements
TAXABLE ESTATE : Value on which estate taxes are calculated by federal government
TEMPORARY LIFE ANNUITY : Annuity payable while the annuitant is alive but not beyond a specific period of time like 5 years; no payments post this period are made or on the death of the annuitant
TENANTS IN COMMON : Kind of joint property ownership whereby the owners may have unequal shares and does not involve right of survivorship
TEN DAY FREE LOOK : Notice on the first page of health plans providing the insured 10 days during which they can examine the policy and return it for claiming refund if unsatisfied
TERM INSURANCE : Insurance payable to beneficiary only in case of the demise of the insured during the duration of the policy
TESTAMENTARY TRUST : Trust created through the creator’s will
THIRD-PARTY OVER SUIT : Lawsuit where the 3rd party tries recovering damages assessed against the party through suit against the employer
THRESHOLD (NO-FAULT) : Point measured time, money, or other methods that are beyond tort liability that can be established; until that point is reached reparations must be paid within the provisions in the no-fault plan without any recourse to the law courts
TIME LIMIT : Period during which claim of notice or loss proof should be filed
TIME LIMIT ON CERTAIN DEFENSES : Two or three year period in health insurance plans post which the insurance company cannot deny any claim or void the plan due to pre-existing conditions or misstatements made at the time of the application
TORNADO : Whirling wind over land mass accompanied by funnel-shaped cloud; is often violent and destructive within a narrow path often over several miles
TOTAL DISABILITY : Injury or illness that prevents an insured individual from constantly performing daily duties related to her or his occupation or engaging in other kind of work
TRANSFERABILITY : Arrangement whereby the accumulated benefit credits of the terminating participant or the actuarial value are transmitted from one policy to another or to central agency
TRUST : Legal instrument allowing one party the control of the property for the advantage of another
TURNOVER RATE : Rate at which the employees terminate services except due to retirement or demise; expected future turnover can be considered by translating contributions to the benefits
TWISTING : Acts of life insurance agent for persuading client/s to discontinue one life plan and accept another policy; misrepresentation of the terms in either of the policies is often done that is detrimental to the insured
TAIL : Exposure existing post expiration of the plan and coverage that is purchased for covering such exposure; on the “occurrence” forms claims tail can be extended for several years after the policy expires and losses are recoverable; on “claims made” forms this coverage can be acquired for extending the period of reporting covered claims beyond the normal period of the policy
TITLE INSURANCE : Indemnifies the real estate owner in case clear ownership of the property is challenged through discovery of faults within the title
TO PAY AS CARGO : Used within ancillary insurances related to cargo when the insured is not needed to show any evidence for loss or interest and can claim on the plan if s/he is able to show corresponding loss has been settled on main cargo plan
TOTAL LOSS : Can be actual total loss or constructive total loss whereby the cost of damage repair exceeding the insured property value
TRANSIT CLAUSE : Clause in the Institute Cargo Classes that specify attachment and termination of the coverage
Glossary on General Insurance Terms starting with U
ULTIMATE NET LOSS : Used in excess of loss reinsurance for total amount paid by the ceding company during settlement of liabilities, other expenditures that exclude office expenditures, salaries, after reducing recoveries/salvage and other reinsurance recoveries
ULTIMATE NET LOSS CLAUSE : Clause in the excess of loss reinsurance plan implying total sum actually paid by the reinsured for settling the losses including loss expenditures, salvage, and recoveries and including recoveries from the treaties shall be insured for the benefit of the excess of loss coverage
ULTRA VIRES : Beyond the authority or power
UNFAIR OR MISLEADING ADVERTISEMENT : Advertising that does not clarify the product as insurance in clear terms; makes claims that are beyond the policy; describes benefits that are not matching to provisions in the policy; provides information in misleading way; or any other instance that provides inaccurate or false information
UNALLOCATED BENEFIT : Policy provision offering reimbursement to a maximum amount for the cost of all additional miscellaneous hospital services but does not specify the amount that will be paid for each kind of service
UNDERINSURANCE : Inadequate insurance cover related to the insured property; results in claim admitted under the plan being reduced proportionately
UNDERLYING LIMIT : Used in excess of loss treaty/treaties and specifies the limit to which ceding company can bear the loss/es due to single occurrence or event prior to the invoking of the recovery from the reinsurance provider
UNDERWRITER : An insurer or official in the insurance company with the primary responsibility of performing the underwriting functions for determining whether proposed risk is insurable and if so then the rate and other terms and conditions
UNDERWRITING : Procedure of examination of the proposal, arranging risks inspection/s, fixing rate of premiums, terms and conditions of coverage, rejecting uninsurable risks with the primary aim of ensuring risks spread within large group of insured’s in a way that is equitable for insuring the community and profitability for the insurance provider
UNDERWRITING LOSS : Shortfall resulting post the payment of claims and expenditures against the received premium
UNINSURADLE RISK : Risk that is not acceptable for insurance coverage due to its extensiveness
UMBRELLA LIABILITY : Insurance cover for losses exceeding the amounts covered by other liability insurance plans also provides protection to insured in several situations not covered under regular liability plans
UNDERWRITING PROFIT OR LOSS : Amount of money that an insurer gains or loses due to its normal operations; excludes investments and federal income taxes
UNEARNED PREMIUM : Portion of premium that an organization has collected but still needs to be earned as the policy has unexpired time to run
UNIFIED CREDIT : Single time credit available to every person’s estate; credit is also useable for payment of gift taxes during the person’s lifetime
UNIFORM PREMIUM : Rating structure whereby single premium is applicable to all insureds irrespective of age, gender, or occupation
UNIFORM PROVISIONS : Statutory policy provision/s in health insurance plans that specify some rights and obligations of the organization and company; these along with certain modifications comprise insurance laws
UNIVERSAL LIFE INSURANCE : Flexible premium on life insurance plan whereby the policyholder may modify death benefit from time to time (providing adequate evidence of insurability) and vary the sum or timing of the payment of premiums; premiums that are lower than expenses are credited to the policy account from where the mortality charges are deducted and interest credited at rates that may change over a period of time
UMBRELLA LIABILITY POLICY : Liability insurance plan providing liability protection beyond and above what is provided under the standard liability contracts
Glossary on General Insurance Terms starting with V
VALID CONTRACT : Contract that is enforceable in the court of law
VALUATION CLAUSE : Clause appearing in Institute of Time Clauses and other hull clauses that provides the insured value is to be considered as required value for constructive total loss requirements and nothing related to the break up value is considered
VALUE : Worth of the property that is needed to be insured or which is damaged or lost
VALUED POLICY : Insurance contracts whereby sum insured related to insured property is deemed to be actual property value through the duration of the policy; claims related to total loss are settled without any adjustment that may otherwise arise on similar considerations as adequacy of sum insured, market value, etc.; marine insurance for cargo and hull plans are “valued policies”; under fire and burglary policies such facility is extended with regards to paintings, curios, valuables, pictures, antiques, and other arts
VARIABLE EXPENSES : Expenses that vary in relation to the quantum of production or turnover volume; variable expenditures are eliminated while calculating gross profit of businesses for the purpose of determining sum insured under business interruption or consequential loss plan
VARIABLE QUOTA SHARE TREATY : In quota share treaty, there may be retention with certain maximum for example 20%; this means on certain risks retention can be lower than this predetermined percent and is termed as variable quota share; there are corresponding variations related to maximum reinsurance with respect to these risks
VEHICLES LAID UP : Refers to comprehensive motor insurance being laid up in garage or not being used; subject to notice from the insured in advance during the period when vehicle is to be laid up, insurance provider restricts covering during this period for fire, burglary, and theft risks only; insured consequently will receive either of these benefits; part of the premium already collected by insurance company will be given to insured’s credit during renewal or existing plan will be extended by a period that is equivalent to laid up duration through the charge of an additional premium for restricted coverage during the laid up time
VEHICLES SUBJECT TO HYPOTHECATION AGREEMENT : It is not permissible for insurance companies to issue policies in joint names of pledge and registered owner of vehicles; coverage should be issued in registered owner’s name only and pledges’ interest is protected by using the appropriate endorsement
VEHICLES SUBJECT TO LEASE AGREEMENT : Insurance cover cannot be issued in the joint names of lessor and leasee; policies should be issued in leasee name and lessor interest is protected through appropriate endorsement
VETERINARY HEALTH CERTIFICATE : Certificate issued by qualified vet on the health and value of an animal; is obtained when insurance is being applied for to determine only healthy animals are insured for their accurate value
VOID CONTRACT : Agreement that is not enforceable by law
VOIBADLE CONTRACT : Agreement that can be enforced by law at the option of one or more of the contracting parties but not at the option of the other/s
VALUABLE PAPERS AND RECORDS INSURANCE : Inland marine or burglary insurance cover offering replacement of valuable papers, forms, and records
VOID POLICY : One that is inadmissible as evidence in the court of law
Glossary on General Insurance Terms starting with W
WAGERING CONTRACTS : Marine insurance contracts whereby the insured has no insurable interest in the covered subject matter nor does s/he have any expectations of procuring interest during any time while the policy is in force
WAITING PERIOD : Time mentioned as “waiting period” in the insurance contract during when any loss-taking place is irrecoverable under the plan
WAIVER : Voluntary relinquishment of any known right; may arise when an individual knowing of right accrued to him or her fails to take advantage of it within reasonable period of time
WAIVER OF SUBROGATION : Clause in policies that are issued in favor of two or more parties having financial interest and/or involvement in the insured subject matter where the insurance provider consents to waive rights or action or subrogation that may have been acquired against any of the insured due to an occurrence where claim is admissible under the policy
WAR RISKS TIME POLICY-GOVERNMENT OF INDIA WAR RISKS SCHEME FOR MARINE HULLS : Scheme by the Indian Government for insuring Indian hulls against risks due to strikes or wars; applicable to all vessels registered under Merchant Shipping Act 1958, also applicable to ships qualifying for registration that are under construction or acquired from foreign owners from the time they are at risk of Indian owners; also applicable to mechanized sailing vessels
WAREHOUSE TO WAREHOUSE COVER : Voyage through which the cargo to be moved begins from seller warehouse and terminates on arrival at buyer warehouse; scope of cargo coverage extended to take care of interior transits at both ends of the ocean transit too
WAREHOUSE-KEEPERS : Organizations or individuals that receive goods for the purpose of storage in their warehouse/s; they must exercise sufficient care and diligence and receive payment for the delivered services; they have lien on the goods for charges that are payable to them and thus have an insurable interest in these goods
WARRANTED UNDERDECK : Incorporated in marine insurance policies giving a promise or undertaking by the insured stating the insured cargo will be carried under deck any breach of this warranty enables insurance provider to avoid the contract
WARRANTY : Undertaking by the assured stating that something will be done; certain state of facts do not exist, something will not be done, or certain state of facts do exist
WARRANTY SURVEYORS : Surveyors that conduct surveys related to towing of one vessel by another; suggesting towage method; appropriateness of towing line; monitoring climatic conditions during towing, and precautions that need to be taken to avoid any accidents; warranty surveyor also approve condition of vessel that must be towed and vessel used for towing based on the journey, capability, and distance
WARSAW CONVENTION : Signed in 1929 is an international agreement governing liability of air carrier/s in case of damage to passengers baggage and booked cargo carried from one nation to another; it now amended as Hague Protocol from 1963
WAIVER OF PREMIUM : Provision within some insurance policies for relieving the insured of premium payments falling due during a period of continued total disability lasting for a specified time; such as 3 or 6 months
WHOLE LIFE INSURANCE : Life insurance payable to beneficiary/beneficiaries on the demise of the assured; premiums may be paid for specified number of years or for life
WILL : Legal statement of an individual’s wishes concerning the disposal of her or his property on death
WORKERS COMPENSATION : System established under state laws providing payments without regarding fault to employees injured during their scope or course of employment
WORKERS’ COMPENSATION INSURANCE : Insurance against liability imposed on employers to pay benefits and provide care to injured employees and pay benefits to dependents of deceased employees during the course of employment
WRITTEN PREMIUMS : Entire amount of premiums due within a year for all the insurance policies issued by insuranceservice provider
WAIVE : Forego, refrain from insisting on application of the insurance deductible under certain specified conditions
WAIVER CLAUSE : Clause that entitles underwriter and insured for adopting measures for prevention or reduction of losses without prejudice to rights of either party
WATERBORNE AGREEMENT : Market understanding where the underwriters cover goods against risks due to war only whilst these are on board foreign vessels; rule is relaxed in case goods in trans-shipping port for a short duration awaiting onward carriage
WITHOUT BENEFIT OF SALVAGE : Term in marine insurance where the underwriter forgoes subrogation rights; policy including such term is deemed to be gambling policy under law and not valid in the courts
WITHOUT PREJUDICE : Claim paid on the occasion; although the insurer feels it does not attach the plan but such action must not be treated as precedent for similar claims during the future
Glossary on General Insurance Terms starting with Y
YEAR OF ACCOUNT BASIS : Accounting technique practiced related to reinsurance transactions; within this category accounts dealing with premiums and losses during the year being considered irrespective of the origination year of the cession or loss
YIELD : Ratio of the income earned on an investment to the face value of the investment; also known as current yield on the investment
YORK-ANTWERP RULES : Set of rules devised as voluntary code of maintaining universal standardization on treating General Average; provisions in these rules form the basis of adjustments related to general average
Contact Jubilee Insurance Broking Services office or submit a business inquiry online.
Jubilee Insurance Broking is truly an invaluable partner on your side. We believe security is always a priority & not an option. Hence our team constantly strives towards taking care of what’s important.
