Perils additional and similar or allied to
the main peril covered under a policy, e.g. explosion or sprinkler
leakage included in a fire policy.
All Risks
All fortuitous causes of loss. It does not
cover inevitable loss, such as wear and tear.
Average Clause
A clause in a policy, whereby partial losses
are subject to special conditions.
Binding Cover
An authority issued by an insurer to another
party to accept insurances on his behalf.
Co-Insurance
Where two or more persons share a single
risk. A co-insurer is not obliged to follow the decision of another
co-insurer, except where he has given authority for the other
person to act on his behalf. Each co-insurance is a separate contract
with the insured.
Consequential Loss
Insurance of loss following direct damage,
e.g. loss of profits; loss of use insurance.
Contingency Insurance
Insurance of loss due to a contingency, e.g.
non performance, cancellation of event.
Contribution
The term relates to circumstances where more
than one party covers the risk. Each party is deemed to be liable
for his proportion of the loss. If the assured recovered in full
from one insurer, that insurer is entitled to recover from the
other insurer for that part of the loss which should have been
paid by the latter.
Cover Note
A document giving or confirming insurance
cover.
Cut Through Clause
A clause which makes a reinsurer directly
liable to a direct assured in lieu of the reassured.
Deposit Premium
A premium or part premium paid at inception
of insurance.
Disclosure
The duty of the assured and his broker to
tell the underwriter every material circumstance before acceptance
of the risk.
Ex-Gratia
A claim settlement made without admission
of liability or where liability clearly does not exist.
Fac/oblig Facultative/obligatory
A reinsurance term for a contract where the
reassured can select which risks he cedes to the reinsurer, but
the reinsurer is obliged to accept all cessions made.
Facultative
The right of option. The right of an underwriter
to decide whether or not to accept a risk. Declarations under
a cargo open cover are obligatory rather than facultative.
General Average
A deliberate sacrifice or expenditure incurred
for the common safety of the adventure. Those interests that benefits
from the sacrifice or expenditure contribute ratably towards the
loss.
Good Faith
A basic principle of insurance. The assured
and his broker must disclose and truly represent every material
circumstance to the underwriter before acceptance of the risk.
A breach of good faith entitles the underwriter to avoid the contract.
Held Covered
A provisional acceptance of risk, subject
to confirmation that cover is needed at a later date. Where applicable
to an existing insurance, cover is conditional, in practice, on
prompt advice to the underwriter as soon as the assured is aware
of the circumstance to be held covered coming into effect, and
a reasonable additional premium is payable if the risk held covered
comes into effect.
Insurable interest
The principle that an insured must suffer
financial loss or injury before having the right to an insurance
recovery. It is illegal for anyone to insure without an insurable
interest or, in the case of marine insurance, a reasonable expectation
of acquiring such interest. In general one has such interest when
his relationship to property at risk may expose him to loss or
liability or where he stands to gain by the safety of such property.
Misrepresentation
A mis-statement of fact made by the assured
or his broker to the underwriter, before acceptance of the risk,
which misleads the underwriter in assessing the risk. If the representation
is material and amount to misrepresentation it is a breach of
good faith.
Natural Expiry
The normal expiry date of a policy of insurance.
Non-Disclosure
Failure of the assured or his broker to disclose
a material circumstance to the underwriter before acceptance of
the risk. A breach of good faith.
Open Cover
A cargo insurance agreement covering all shipments
of the assured for a period of time, subject to a cancellation
clause and a limit to the amount insured in any one ship and/or
location. Other conditions include a classification clause.
P & I Club
A protection and indemnity society. A community
of shipowners and operators who mutually insure themselves for
risks not normally covered by the ordinary hull insurance market.
The club is primarily concerned with liabilities incurred by its
members; both contractual (e.g. to cargo owners) and third party
(e.g. collision liability).
Proximate Cause
The most direct cause of loss, that is, the
most effective but not necessarily the last in a train of events.
Representation
A statement of fact made by the assured or
his broker when negotiating an insurance with the underwriter.
Retention
An amount retained by a reinsured when effecting
a reinsurance.
Risk
The term is used to define causes of loss
covered by a policy. It does not cover inevitable loss.
Risk Management
The art or craft of assessing an assured's
exposure to loss and taking steps to mitigate that exposure.
Signed Line
The percentage expressed on a signing slip
or in a policy, which when applied to the sum insured, indicates
the extent of the underwriter's liability.
Strikes Cover
Limited to damage caused to insured property
by strikers, locked out workmen and persons involved in a labour
dispute. Does not include loss or expenses incurred as a result
of strikes etc.
Subrogation
The right of the underwriter to step into
the shoes of the assured following payment of a claim to recover
the payment from a third party responsible for the loss. Limited
to the amount paid on the policy.
Third Party Liability
Liability incurred by the assured to another
party but excluding contractual liability.
Uberrimae Fidei
Utmost good faith.
Under-insurance
To insure assets for less than its full value.
Underwriter
An insurer's employee who` decides whether
or not to accept a proposal or insurance and, if so, on what terms
and conditions.
Underwriting agency
An intermediary who is allowed to under-write
and accept risk on behalf of an insurer, subject to certain laid
down criteria and limits.
Unearned Premium
That part of the premium (if any) which relates
to a period during which the underwriter is not on risk.
Utmost Good Faith
Mutual trust in negotiating an insurance
contract. A breach of good faith by one party entitled the other
to avoid the contract.
Valuations
Claims are much more easily and satisfactorily
handled if you have up-to-date property valuations. With buildings,
of course, you have to look at rebuilding costs rather than market
value, as you do not insure the land.
Void and voidable
A contract is considered legally void, that
is invalid, if obtained by fraud or if the contract is deemed
to be a bet. Contract is voidable on the other hand if it can
be avoided by the aggrieved party. He can get out of the contract
if there has been a breach of utmost good faith.
Voyage Policy
Marine insurance covering goods for as long
as they are moving from one place to another, as opposed to a
Time policy where cover is simply for a definite period of time.
Waiting period
A period of time which most policies' lapse after, say,
the inception of a disability, before benefits become payable.
Commonly found in permanent health insurance policies.
Warehouse to Warehouse
This cover is quite usual under any Marine
Cargo policy covering goods moving from the manufacturer's premises
to the consignee's warehouse at the final destination.
Warranty
An undertaking by the assured whereby he promises
to comply with the terms of the warranty. Non-compliance constitutes
breach of warranty and the underwriter is discharged from liability
from the date of the breach. Breach of warranty may be excused
in certain circumstances, or where the breach is held covered
under the policy conditions.
Without Prejudice
The claim is paid on this occasion, although
the underwriter feels it does not attach to the policy, but this
action must not be treated as a precedent for future similar claims.
Workmen's Compensation
The Workmen's Compensation Act provides for
the payment of compensation to workmen who sustain injuries or
contract occupational diseases as a result of their employment.
Insurance for this is mandatory.
