Glossary


 

A

 

Accident
An unexpected mishap or event.

Additional Benefit
A benefit added to a standard policy cover.

Average Condition
A condition in an insurance policy which applies where the Sum Insured or value of the property has been under-insured. In such circumstance the insured's claim is reduced proportionately to the under-insurance.

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B

 

Beneficiary
One who will receive a benefit from an insurance policy.

Betterment
A term refers to an improvement in the property insured following its repair or reinstatement.

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C

 

Certificate of Insurance
A document stating the fact of insurance usually issued under a group or master policy where it is convenient to have such evidence of cover separate from the group or master policy.

Contract of Indemnity
A contract with the intention to make good financial loss as nearly as possible. Most insurance contract is based on this principle.

Contractual Liability
Liability that arises by virtue of a contract and not from liability at common law.

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F

 

Fire
Actual ignition of something that should not be on fire and the cause must occur accidentally.

Fire Wall
A wall that divides the property into different fire areas with the purpose to prevent the spread of fire.

Forcible & Violent Means
In burglary insurance, the term refers to theft following on entry or exit by forcible and violent means.

Fortuitous Event
An event that happens by chance.

Fraud
An act done with intent to deceive.

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G

 

Geographical Limits
The geographical llimits within which an insurance is stated to operate.

Gross Premium
The total premium before deduction of discounts.

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H

 

Hazard
A physical or moral element that increases the chance of a loss.

Hospital Cash
Payment of a cash sum for a specific period for treatment as a hospital in-patient.

Household Goods & Personal Effects
In insurance the term refers to furniture, clothing and other customary contents of a private dwelling.

Householders' Insurance
A package of insurances designed for private dwelling that covers contents against fire, theft and other specified perils and also liability of the householder as occupier.

Houseowners' Insurance
A package of insurances designed for the owners of private dwelling that covers the buildings against fire, theft and other specified perils and also liability of the owner to third parties.

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I

 

Indemnity
In insurance 'indemnity' means the making good of a loss by way of a monetary payment.

Inherent Vice
A quality in goods that causes damage by its own action.

Insurable Interest
The insured is said to have an 'insurable interest' in the subject-matter of the insurance if he will benefit from its survival or will suffer from the loss or damage of it or may incur liability in respect of it.

Insurance Agent
A representative of an insurer who negotiates, effects or services contracts of insurance.

Insurance Broker
One who advises person on their insurance needs and negotiates insurances on their behalf with insurers.

Intermediary
An agent or broker.

Inventory
A list of items of property.

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J

 

Jurisdiction Clause
A clause in a policy that specifies which country's courts shall have jurisdiction in the event of a dispute under the policy or, in liability insurances, that excludes liability for third party claims brought in other than domestic courts.

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K

 

Knock-For-Knock Agreement
An agreement between insurers that in the event of an accident involving their respective policyholders neither insurer shall seek to recover the cost of repairing the damaged caused to the vehicle it insures from the other party.

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L

 

Landslip
The sliding down of a mass of land.

Lapse
When a policy is not renewed the policy is said to lapse.

Loss of Limb
Under a Personal Accident policy a lump sum benefit will be payable for the loss of one or more limbs resulting from an accident.

Loss of Specie
When the property insured is so damaged that it ceases to be the kind insured.

Loss Prevention
Measures recommended or imposed by insurers to prevent losses.

Loss Ratio
The proportion of claims paid to premiums earned.

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M

 

Malicious Damage
Deliberate damage by individuals.

Market Value
The value of property at a price acceptable to a willing seller and a willing buyer.

Material Fact
A fact that will influence a prudent insurer in deciding whether or not to accept a proposed insurance and if so, on what terms and conditions.

Minimum Premium
The minimum premium for a particular class of insurance that an insurer is prepared to accept taking into consideration the administration expenses that the insurer will incur.

Minimizing a Loss
In the event of a loss cover under the policy it is the duty of the insured to take all reasonable steps to minimize the loss, acting as he would as in his own interest if the loss is not insured.

Misdescription
An incorrect description of the risk proposed for insurance by the proposer.

Misrepresentation
An incorrect statement.

Moral Hazard
The hazard arising from the recklessness or dishonesty behaviour of the insured or his family or employees that may increase the possibility of loss.

Mortality
Deaths.

Mortality Risk
The risk of death.

Mortgagee
A lender or financier to whom property is charged as security for a debt or loan on the condition that the property will be discharged when the debt or loan is fully paid.

Mortgagee Clause
A clause in an insurance policy providing beneficiary rights to the lender or mortgagee.

Mortgagor
The borrower who charges his property to the lender on condition that it will be discharged when the debt or loan is fully paid.

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N

 

Negligence
The failure to do something which a reasonable person would do, or doing something which a prudent and reasonable person would not do.

New for Old
A basis of settlement for property insurance where the insurer agrees to pay the replacement cost of the property destroyed without a deduction for depreciation.

No Claim Bonus
A renewal premium discount for there having been no claim paid in the previous year of insurance. This is common in motor insurance.

Notice of Claim
A condition requiring immediate notice of an occurrence that may give rise to a claim.

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O

 

Occupancy
Usage of building by the occupier. In fire insurance, occupation of the building is one of the rating factors.

Occupational Classification
In personal accident insurance premium rating depends on class of occupation of the insured person(s).

Occupational Disease
Sickness caused by one's occupation.

Occupational Hazard
An inherent risk in an occupation.

Off Risk
It means an insurer has terminated the insurance cover.

On Risk
The insurer is providing insurance cover.

Open Cover
In marine cargo insurance 'open cover' means the insurer is granting cover for all shipments falling within the terms of policy from time to time as declared by the insured.

Operative Clause
The part of an insurance policy that states what the policy covers.

Over-insurance
Insuring a property for greater than its value.

Own Damage
Damage to the insured's own vehicle.

Owner's Liability
Liability of the owner of a building to third parties' bodily injury or property damage.

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P

 

Partial Disablement
Injury that partially reduced one's ability to work.

Partial Loss
A loss not amounting to a total loss.

Passenger Liability
In motor insurance the liability of the carrier or driver to passengers for bodily injury caused by negligence.

Peril
A possible cause of loss.

Permanent Disablement
Permanent loss of ability to work.

Personal Accident Insurance
Insurance for fixed benefits in the event of death or loss of limbs or sight caused by accident.

Personal Liability Insurance
Insurance against individual's liability to third parties for bodily injury or death.

Physical Hazard
A physical feature that increases the possibility of a loss.

Policy
An document stating the terms of an insurance contract.

Policyholder
The insured person.

Pre-existing Condition
A state of health which existed prior to the inception of an insurance cover. A condition usually impose under a Hospital or Medical insurance policy.

Premises
A building with its grounds and belongings occupied by the insured.

Pro rata
In proportion.

Probability
The likelihood of an occurrence.

Profit Commission
A commission paid by the insurer to its agents in proportion to the profit generated on specified insurance business.

Project Insurance
A combined insurance for a construction project.

Proof of Loss
In insurance the onus or duty of proving that a loss has occurred and that it was caused by an insured peril rests with the insured.

Property Insurance
Insurance of physical property.

Proportional Rule
The application of the 'average condition' under an under-insurance scenario.

Proposal Form
An application form for insurance printed by an insurer.

Proviso
A condition in a policy which must be observed failing the policy may be invalidated.

Proximate Cause
The 'immediate or effective cause' that leads to an event.

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R

 


Rebate
A discount.

Recovery
Money recovered by the insurer in respect of a loss.

Reinstatement
In the event of loss an insurer may reinstate or 'make good' a loss rather than pay the loss in monetary form.

Reinstatement Premium
Premium payable to restore the sum insured to its original level after it has been depleted by a loss.

Renewal Notice
A notice given by an insurer informing the forthcoming expiry of an insurance.

Replacement Value Clause
The replacement of the damaged property without deduction of depreciation, conditionally upon the sum insured being the replacement value.

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S

 

Schedule
The part of the policy where variable details are inserted.

Short Period Rate
The rate of premium of less than one year, usually higher than the annual rate.

Silent Risk
Premises where no trade is carried out.

Spontaneous Combustion
Combustion that occurs without heat being applied externally, usually occurs through gradual oxidation of a substance which slowly raises its temperature.

Storm
Very strong wind accompanied by rain or hail or snow.

Subrogation
The right of an insurer to be in the place of the insured having paid the loss to seek recovery of the loss from a third party.

Subsidence
Damage to building caused by sudden movement of land.

Sum Insured
The amount insured and payable under a policy.

Survey
An inspection of property proposed for insurance.

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T

 

Target Risk
The biggest hazardous insurance.

Tempest
A violent storm.

Temporary Disablement
In personal accident insurance benefits is payable for one's inability to work in whole or in part over a short period of time arising from an accident.

Territorial Limits
Same as geographical limits.

Terrorism
Putting the public in fear by violent means for political reasons.

Theft
Dishonestly obtaining property from others with the intention to keep it permanently.

Theft Insurance
An insurance cover against theft.

Third Party
A person who is not a party to an insurance contract.

Third Party Insurance
In motor insurance a third party cover protects the insured only against his liability for bodily to, or property damage of, third parties.

Time Excess
The specified period of loss that the insured bears.

Total Disablement
Injury that incapacitated a person from his occupation totally.

Total Loss
An insured property that is destroyed beyond economic repair.

Trade Risk
A risk inherent to a trade that is not intended to be cover under an insurance policy.

Trustee
A person legally vested with the ownership of property for the benefit of another.

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U

 

Uberrima Fides
Same as Utmost Good Faith.
Under-insurance
Insufficient sum insured for full payment of loss.

Underwriter
Same as insurer.

Utmost Good Faith
In insurance contracts both the insurer and the insured are required to exercise utmost good faith or truthful in their dealings with each other. More so for the proposal of an insurance to disclose all material facts to the insurer so that he may assess his application prudently.

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V

 

Void
A contract without legal effect. Voidable An insurance contract is said to be voidable if a party to the contract chooses to avoid it, otherwise is effective.

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W

 

Waiting Period
A period in which the benefit of the policy will not be payable after the inception of the policy. For example, a hospital & medical policy with 30 days 'waiting period' exclusion for hospital expenses would not pay for expenses incurred within the 30 days from inception of the policy.

Warranty
A warranty in an insurance contract is a condition that must be complied with. A breach of the warranty entitles the insurer to deny liability.

Wear and Tear
Damage due to deterioration of the property over time which is excluded in an insurance policy.

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