A
B
Balance As Per Contra
|
There
could be certain transactions wherein the insurance companies invest
the funds and create investments on behalf of a particular fund and
hence the assets cannot be treated as the assets of the insurance
company. Such investments are shown on the assets side along with the
wordings as per contra which means similar balance will appear in the
liabilities side which represents the fund for the balances for which
the investments are made. eg. investments made in respect of Environment
Relief Fund.
|
Balance Sheet
|
Accounting
statement showing the financial condition of a company at a particular
date. Listed on the statement are the company’s assets and liabilities
and capital and surplus.
Balance sheet is a snapshot of the values of assets and liabilities of the Company on a particular date. Drawing a balance sheet, as per the format prescribed under the IRDA Regulations, as on the last date of the financial year, is mandatory. However, such balance sheet can be prepared on any day. The balance sheet lists out the value of all assets to the company as against the various liabilities to the company and both the values should be equal on any particular day. |
Balance Sheet Reserves
|
Amount
expressed as a liability on the insurance company’s balance sheet for
benefits owed to policyholders. These reserves must be maintained
according to the provisions of the insurance act, Regulations of the
Insurance Regulatory and Development Authority and also as per the
actuarial formulas. These reserves serve to guarantee that all benefit
payments for which the insurance company has received premiums will be
made.
|
Balances- Agents
|
As
the business of insurance is mostly procured through the Agents all the
premium transactions are accounted agent wise to arrive at dues
from/dues to agents at the end of the year. As the number of
transactions will be more, they are maintained separately for premium
transactions and commission transactions. All the debit balances at the
end of the year are added and shown in the assets side and the credit
balance on the liability side of the balance sheet.
|
Balances- Aging Of
|
The
account balance of any account will comprise of accounting entries over
the entire period and finally at the end of the year, the balances may
arise either out of last few transactions or out of the first few
transactions. Hence, it is necessary to identify as to how long these
transactions are outstanding in the books of accounts. For instance, a
debtors balance can arise out of the last few months balances or out of
first few months balances. In the latter case, it may look that they are
outstanding for almost a year. Hence, steps should be taken for
recovery. Such meaningful analysis can be done only when the year end
balances are classified according to the age of the transaction.
|
Balances- Coinsurance
|
There
are certain risks, which are shared between the direct insurers at the
instance of the insured. These are of coinsurance transactions. Here the
lead Insurer collects the 100% of the premium and in turn pass on the
respective share of the premium to the co-insurance Companies. In the
case of claims also, the lead insurer pays 100% of the claim and
collects the co-insurers share of claim later. Such transactions are
routed through the co-insurance companys account codes and the balances
in these accounts are reflected in the assets side or liability side of
the balance sheet, depending on the nature of balance.
|
Balances- Confirmed
|
The
balances in the account of the insurance company may arise out of the
transactions with outside parties who have to confirm their balances so
as to certify the correctness of the accounts. For instance, a Bank A/c.
shown with balance as per the account has to be confirmed by the
banker. Similarly, an amount shown as due from outsider has to be
confirmed as due from outsider. Confirmed balances add to the
correctness of the balance.
|
Balances- Inter Branch/ Office
|
If
the insurance company has large number of Branches for its operations,
there could be many transactions between the Head Office of the Company
and its Branches and also between the Branches. The balances in these
Branch Accounts are grouped under Inter Branch Account Balances and
shown in the balance sheet.
|
Balances- Reconciled
|
Various
account balances at the end of the year are made up of different
accounting entries and each entry in each account should be reconciled
with the corresponding entry in which case, every item in the account
balance at the end of the year can be explained. When such a detailed
analysis of the transactions is done, the balances are said to be
reconciled. Otherwise they are treated as reconciled balance.
|
Balances-Reinsurance Company
|
The
direct insurer will be having transactions with the reinsurance
companies either on treaty basis or facultative basis, which will
involve premium cessions as well as claim recoveries. This will also
have reinsurance commission transactions. All the balances in the
reinsurance accounts are grouped under the reinsurance company balances
and shown on the assets side or liability side of the balance sheet,
depending on the nature of balance.
|
B/L
|
Bill
of Lading. A bill of lading is a receipt signed on behalf of the ocean
carrier, indicating in what apparent order and condition the goods have
been received on board. It is not necessarily the complete contract of
carriage of goods but is usually the best evidence of the contract. It
is also a document of title and thus a document of transfer.
|
Back Office
|
Immediate
controlling office, which does not directly transact business, but
monitors and controls the marketing offices. Its main functions include
looking to accounting records, ensure compliance by the marketing
offices of the government regulations, company directives, guidelines
etc. and also hold communication with marketing offices on all matters
concerning the requirements of both sides.
|
Backlog
|
In
insurance, extent of unattended proposals, enquiries or other
references, un-issued policies/documents and indisposed claims preferred
on policies.
|
Back-Up XL Covers
|
Sometimes
it is possible that XL Cover expires before its natural expiry date due
to one reinstatement provision exhausting the cover limits by two total
losses. Back-Up XL Covers are arranged as additional reinstatement
covers for the remaining period.
|
Bad Debts
|
A debt which is impossible to be collected and consequently has become worthless to the creditor.
|
Baggage insurance
|
Insurance
Policy providing cover against loss of or damage to accompanied
personal baggage of the insured or insured’s family member(s)due to
fire, theft or any accident during the course of journey including
stoppage enroute, anywhere in …… The policy normally excludes routine
travels like going to and returning from office, theft from unattended
vehicle, articles worn on the body of the person, war etc. It is
possible that the policy is modified to suit the exact needs of the
proposer subject to mutual consent and the insurer following the
procedure of “file and use” laid down by the Regulatory Authority.
|
Bagged Cargo warranty
|
Marine
Cargo insurance policies normally exclude loss of contents from bags
through seams and also natural loss in weight of cargo. In order that
this issue is successfully addressed the insurers put a warranty in the
policy to the effect that Shortage in damaged bags will be reckoned by a
comparison of the weight of similar number of bags of the same lot
arriving sound at destination and Policy will exclude shortage from
sound bags
|
Bailee
|
A
person who has legal possession of goods belonging to others and is
supposed to take such care of goods as the owner would take. He has the
insurable interest in such goods and can insure the same in his name.
|
Bailment
|
Contract concerning transfer of property from bailor to a bailee.
|
Bailor
|
The
person who transfers his property to the temporary care, control and
custody of another, while retaining the ownership with him.
|
Ballast
|
Material carried in vessel to ensure stability when the vessel is without any cargo.
|
Bank balance as per books and as per bank
|
As
the company is entering all its bank transactions in its bank account
in the ledger, the bank will also be maintaining a ledger account to
record all the transactions pertaining to the company which will be
reflected in the pass book and will also show the balance as per bank at
any point of time. So the bank account will show balance as per the
companys accounts and also as per the books of the bank.
|
Bank charges
|
The
banker levies certain charges for some operations in the bank account
like realizing outstation cheques, for effecting a bank to bank
transfer, for returning the dishonored cheques etc. Such levies are
accounted as bank charges in the books of account of the company by
passing journal entries.
|
Bank Guarantee
|
In
relation to Insurance, guarantee executed by a bank in favour of an
insurer, guaranteeing payment of premium by the insured in relation to
certain policy/policies, within the period stipulated in the guarantee.
|
Bank Reconciliation
|
Normally
the bank account as per the books of the company and as per the bank
should show the same balance. But there could be cases where cheques are
deposited by the company, for which the company has increased its bank
account balance but the same are not yet cleared in the clearing and
hence the bank will show a lesser balance. Therefore the company has to
prepare a statement showing how the balance between the companys
accounts and as per the bank differs and what are the reasons for the
same. Such a statement reconciling the bank balance as per companys
books with that of the bank, is called Bank Reconciliation Statement.
|
Bank Transfers
|
When
funds are transferred from one bank account to another the same has to
be recorded in the books of account. This is done by way of bank
transfer journal entry.
|
Bankers Indemnity Policy
|
A specially designed insurance policy for the banks. Main Coverage is against
|
Bar Chart
|
A
form of graphical presentation of data to highlight the main features
of a frequency distribution of different kinds of risks and their
consequences
|
Bareboat Charter
|
Form of Time Charter where the charterer hires the vessel and meets all expenses incurred during the period of the charter.
|
Barges
|
Smaller
size Vessels for carriage of cargo from port to port-most of them used
for carrying bulk cargo-some used for carriage from shore to ship. They
are either dumb or power driven. They have the risk of capsizing during
inclement weather
|
Barratry
|
Wrongful
act willfully committed by the master or crew to the prejudice of the
owner or the charterer of the vessel. Deliberate running aground,
setting on fire and scuttling of the ship by the crew are instances of
barratry. Loss or damage arising from barratry of the ship is covered
under ITC-Hulls and ICC (A) Clauses.
|
Base Premium
|
Premium charged by the direct insurer on the policy
|
Basic Commission
|
The commission on a reinsurance proportional treaty which is always applied on the written premium of the treaty.
|
Basic Premium
|
The Gross Premium charged by the insurer to the insured under a policy.
|
Basic Rate
|
The rate of premium shown in the Rate Guide or Manual of the Insurance Company for a specific insurance cover.
|
Basis of Loss Settlement
|
A
separate section inserted in all the policies spelling out the basis of
settlement of different types of claims under the policy.
|
Basis of Valuation Clause
|
1.Provision
describing the method of calculating the value of cargo for the purpose
of declaration under marine cargo insurance open covers and open
policies.
2.Provision appearing in the conditions relating to the fire
declaration policies for stocks, dealing with the valuation of stocks
for periodical declaration purposes. |
C
C&F
|
A
sale contract under which the seller has the responsibility of placing
the cargo on board and also incurs the ocean freight and obtain the bill
of lading. It is for the buyer to arrange for an insurance cover for
the voyage and until the cargo reaches the destination.
|
C.I.F.
|
A
sale contract under which the seller is obliged to place the cargo on
board the ship, pay the ocean freight and arrange insurance cover for
the cargo during the voyage and until the cargo reaches the destination.
He should arrange the insurance cover upon terms current in the trade,
which will be for the benefit of the buyer. Seller should then arrange
immediate delivery of all relevant documents including the Insurance
Policy for the requirements and benefit of the buyer.
|
C.I.P.
|
Consignments in a completely knocked down condition, which are assembled at destination to be made into whole units.
|
C.K.D.
|
Consignments in a completely knocked down condition which are assembled at destination to be made into whole units.
|
Caking
|
Commodities
like Sugar, Flour or Cement tend to get caked because of water
absorption from the air. Marine Cargo Insurance Policies for such cargo,
providing even widest coverage normally exclude caking risk, unless
caused by a direct contact with water.
|
Calendar Year Experience
|
Business results during a calendar year analysed and experience studied on a calendar year basis.
|
Call Option/ Put Option
|
These
terms are used to refer to the right of the investor or borrower to
terminate the borrowing programme. For instance, in the case of a 7 year
Debenture with Call and Put Option at the end of 3 years, the borrower
has an option to repay the money raised by the Debentures or the lender
has an option to call for the redemption at the end of 3 years, instead
of waiting for 7 years. When the option is exercised by the borrower it
is called Call Option and when the Option is exercised by the lender it
is called as Put Option. The instruments can be designed to have either
Call Option only or Put Option only or both options.
|
Cancellation
|
The discontinuance of an insurance policy before its normal expiry date stipulated in the policy
|
Cancellation Clause
|
The
clause appears in most of the period policies. This gives the privilege
to both the insurer and the insured to cancel the policy if they dont
want the same to continue until the normal date of expiry. The
conditions of cancellation differ among different policies. The exact
provision in respect of a particular policy will be found incorporated
in the policy.
|
Cancellation of Insurance-Motor
|
A
policy can be cancelled only after ensuring that the vehicle is insured
elsewhere and the original Certificate of Insurance of the policy that
is cancelled is surrendered.
Insurer should inform the Regional Transport Authority by registered A.D. about the cancellation of the insurance. |
Cancellation of Treaty
|
A
clause in the treaty reinsurance wording which outlines the procedure
for termination of the obligations under the treaty by both the cedent
and the reinsurer.
|
Cancellation Returns Only
|
Refund
by the Marine Hull Insurers of pro-rata monthly premium for each
uncommenced month of the policy when the policy is cancelled before the
normal expiry date by mutual agreement between the insured and the
insurer.
|
Cap a Well
|
The term used to control a blowout by placing a very strong valve on the wellhead
|
Capacity
|
(1)
The amount of capital available to an insurance company for
underwriting general insurance coverage or coverage for specific perils.
(2) The amount of insurance a company is able to write, due to limitations on or availability of capital. |
Capacity of the parties to contract
|
One
of the essential elements for a contract to be legally valid.
Applicable to insurance contracts also. Every person should be major by
age, of sound mind and not disqualified by any law to which he is
subject in order that he is considered competent to contract. Insurer
also must have legal capacity to contract.
|
Capital- Authorized
|
This represents the shareholders contribution towards the capital of the company
|
Capital- Paid up
|
This
represents the maximum amount upto which the company can raise capital
by way of issue of various types of shares. This amount is fixed while
incorporating the company and can be changed by following the procedure
prescribed in the companies Act.
|
Capital, Share
|
Out
of the authorized capital the company may choose to issue shares only
to some extent. The portion for which shares are issued and allotted is
called the Issued Capital. Out of the issued capital also the company
may collect the entire amount of the shares in one or two stages which
are called calls. So the amount, which the shareholders have been called
to pay is called the Called up capital. Out of the called up amount
also some shareholders might not have paid the amount due and hence the
amount, which is actually paid by the shareholders is called the Paid up
capital of the company. In normal parlance the capital of a company
will refer to the paid up capital only.
|
Capital Sum Insured
|
The
term used in personal Accident Insurance policies to denote the sum
payable under the policy for death or Loss of Two Limbs or Two eyes or
for other Permanent Total disablement. Insurer normally tends to limit
this sum with regard to individual persons based on the earning capacity
of such persons in order that the persons do not over insure for their
advantage.
|
Captain’s protest
|
When
the ship encounters heavy weather or any other accident or that the
cargo suffers some accidental damages Captain of the Ship signs a
declaration giving details of the accident and damage. This he does
mainly to avoid any claim that may be lodged at a later date against the
Ship management for negligence. This declaration is called Captains
Protest. This document is requisitioned by the insurer in case of a
claim for heavy weather damage to the insured cargo.
|
Captive Insurance Company
|
A
company formed solely to insure the risks of its own parent company and
all units coming within the group, with the primary objective of
a) providing the specific insurance covers for the group b) achieving reduction in cost and also save on the tax angle c) securing best of terms from the international market and d) directly obtaining investment return on its invested capital. |
Carboy
|
Glass containers protected by basket work for liquid cargo shipments, particularly acids.
|
Cargo Insurance
|
Insurance
of all types of goods and merchandise in transportation by Sea, Air,
Rail or Road Transport where such goods or merchandise are transported
under Contract of Affreightment.
|
Cargo Plan
|
Plan depicting space in a ship occupied by cargo.
|
Cargo Thefts (Maritime Frauds)
|
One
of the major causes of maritime frauds. These are caused by the owners
of the ships who are paper companies, deviating the route, after taking
the cargo on board and discharging them into a Port of Convenience, by
using falsely registered vessels. Thefts are also caused by the
collusion between the shipper and the consignee by tampering of the
cargo either on board the vessel or at the terminal point at destination
port and stealing the cargo and later putting a claim on consignee’s
insurer.
|
Carriage by Air Act, 1972 – Claim on Air Carrier
|
As
per Section 26 of the Act, in case of loss or damage to luggage
complaint should be lodged with the carrier within three days of
discovery of such loss/damage and in case of goods the period for
reporting is within seven days. Failure on the part of the owner or the
person entitled to delivery shall result in no action lying against the
carrier.
|
Carriage by Air Act, 1972– Defence of Carrier
|
As
per Section 20 of the Act, the carrier is not liable if he proves that
he and his agents have taken all necessary measures to avoid the damage
or that it was impossible for himor them to take such measures. The
carrier is also not liable if he proves that the damage was occasioned
by negligent pilotage or negligence in the handling of aircraft.
|
Carriage by Air Act, 1972– Liability of Air carrier
|
As
per Section 18 of the Act, the Carrier is liable for damage sustained
in the event of the destruction or loss of, or damage to, any registred
luggage or any goods, if the occurrence which caused the damage so
sustained took place during the carriage by air. The term carriage
includes the period during which the luggage or goods are in charge of
the carrier, whether in an aerodrome or on board an aircraft.
|
Carriage by Air Act, 1972– Limitation of Liability
|
As
per Section 22 of the Act, for registered luggage and goods the
liability of the carrier is limited to 250 francs per kilogramme unless
the actual value of the goods were declared to the carrier by the goods
owner when the goods were handed over for carriage.
|
Carriage by Air Act, 1972– Time Limit for Suit
|
As
per Section 29 of the Act, the right of recovery for loss or damage
shall be extinguished if an action against the carrier is not brought
within two years reckoned from the date of arrival of the aircraft at
destination or the date on which it ought to have arrived.
|
Carriage by Air Act, 1972
|
This
act gives effect to the provisions of the Warsaw Convention, 1929 and
the Hague protocol, 1955 relating to international carriage of
passengers and goods by Air.
The act defines the liability of the Air Carriers for death or injury to passengers and for loss of or damage to registered luggage and cargo. It also mentions the time limits within which claim notice is to be served and suit to be filed against the Air Carrier. |
Carrier
|
Shipowner, Airlines, Railways, Road Carriers or any other person or organisation who carry goods for transport.
|
Carrier’s Act, 1865– Notice of Loss
|
As
per Section 10 of the Act no suit shall be instituted against a common
carrier of the loss/damage to goods, unless notice in writing has been
given within six months from when the loss/damage first came to the
knowledge of the goods owner or his agent
|
Carriers’ Legal Liability Insurance
|
Policy
intended to cover the legal liability of the Transport Carrier for loss
or damage to goods entrusted to him for transport from one place to
another. As the title of the policy implies, it does not cover any
contractual liability assumed by the carrier. Insurer’s, for
underwriting considerations, tend to limit the coverage only in respect
of loss or damage to goods arising out of a fire or any other accident
to the carrying vehicle and also insist that the carrying vehicle should
also be covered comprehensively under motor insurance
|
D
D.A.F. (Delivery At Front)
|
One
of the terms of contract of where the seller undertakes to deliver the
goods at a named place or point at the frontier (at the border between
the two nations)
|
D.D.P. (Delivery Duty Paid)
|
One
of the terms of contract of sale where the seller undertakes to deliver
the goods at the named place in the country of the importer and also
pay the customs duty.
|
D.D.U. (Delivery Duty Unpaid)
|
One
of the terms of contract of sale where the seller undertakes to deliver
the goods at the named place in the country of the importer, but that
the duty for the goods shall be paid by the buyer.
|
D.E.F. (Delivery Ex Ship)
|
One
of the terms of contract of sale where the seller where the seller has
the responsibility to arrange shipment of the goods up to the
destination port and bear costs as well as risk up to that point.
|
D.E.Q. (Delivery Ex Quay)
|
Similar to a D.E.F. contract but that the seller has responsibility to see that the goods are placed in the quay.
|
Dacoity
|
Robbery
committed by a group of persons. Standard Burglary Insurance Policy
issued to both business houses and dwellings cover loss of property
arising out of a dacoity
|
Damage by hooks, mud, oil or Other extraneous substances.
|
Group
of extraneous perils covered as an extension to the coverage granted
under the marine cargo insurance policy subject to the Institute Clauses
ICC © or ICC (B) on payment of appropriate additional premium. The
losses grouped under this category are, damage by hook, oil, mud and
contamination by any extraneous matters. The hooks used by the dock
labour for moving goods in bales, rolls or bags cause extensive damage
and loss of contents. Contamination by mud, acid and other chemicals is
also frequent in respect of bagged or baled cargo.
|
Damages
|
Monetary compensation awarded at law for a civil wrong or a breach of contract
|
Date of issue
|
Date on which the policy, evidencing the coverage has been issued by the insurer
|
DCDRF
|
District Consumer Disputes Redressal Forum.
Complaints against insurers for deficiency of service can be filed by the policyholders in the district forums where the compensation claimed does not exceed Rs.5,00,000/-. The District forums have jurisdiction over one or more districts. |
Dead Well
|
A well that has ceased to produce oil or gas either temporarily or permanently.
|
Deadfreight
|
When
space is booked on a vessel but is not used by the party who booked the
space, freight is still payable. This is called Deadfreight. The right
to such deadfreight is normally exercised by the shipowner only under
charterparties
|
Deadweight
|
The
maximum weight in tons of the cargo, stores, water, fuel and crew, all
put together which a ship can carry when loaded down to her load-line
level.
|
Dealer
|
Authorised agent of manufacturer for sale of the manufactured goods/vehicles
|
Death
|
Termination
of life as a result of an accident. In order that claim for such death
is recoverable under the policy, the beneficiary should furnish to the
insurer a death certificate issued by the concerned authority. Sometimes
a postmortem certificate may also be insisted to establish the cause of
death.
|
Death Benefit
|
A
payment made to the nominee or the legal heir of the insured under a
Personal Accident Insurance Policy in the event insureds death.
|
Death Claim
|
Claim lodged under the policy by the beneficiary for the death of the insured or the insured person.
|
Debenture
|
A
bond that is backed only by the general credit of the issuing
corporation. No specific property is pledged as security behind the
loan.
|
Debentures -Convertible / Non-Convertible
|
When
Debentures are issued with specific understanding that after a
specified period the same will be converted into Equity Capital of the
Co. either at a price determined or a price to be fixed as per the
formula determined. For instance, a Debenture of Rs. 1000/- issued at
14% interest for 5 years can be converted at the end of 5 years into
Equity at a price of say Rs. 15 per share (Face value Rs. 10) at the end
of 5 years or at a price equivalent to the average of the six monthly
trading price prior to the date of conversion. When no such compulsory
conversion into Equity is specified in the Debenture the same becomes
Non-Convertible Debenture.
|
Debentures – Optionallly Convertible
|
A
Company can issue Debentures giving the option to the lender to convert
into Equity at a specified price or a formula and in case the lender
does not exercise the option the Debenture will be redeemed on the
specified date. In this case the lender has an option to convert or not
depending on the market price of the share on the date of the conversion
or any other factor he may consider for Conversion.
|
Debentures – Project
|
Money
raised through Debentures by a Company, for setting up a new project or
for Capital Expenditure. Normally the period of such Debentures are
long term which are covered not only for the construction period of the
project but also upto the period by which the Company will be able to
earn out of the new project to redeem the debentures. Normally such
Project Debentures are appraised by the Financial Institutions.
|
Debentures – Rated Or Unrated
|
Debentures
are instruments, which are normally rated by Credit Rating Agencies
like ICRA, CRISIL. These Agencies rate the Debentures depending on the
capacity of the Comapny to redeem the debentures on the due dates and
also to pay interest on due dates. Normally a strong rating is indicated
by a rating of AAA and it goes down to `AA or `A, even `BBB. However
IRDA Norms prescribe that the minimum rating for investments should be
of `AA and it can be reduced to A+ in specific circumstances by the
Investment Committee of the Insurance Company.
|
Debentures- Secured
|
Debentures issued by charging any of the assets of the Co.
|
Debentures -Unsecured
|
Debentures raised without any security
|
Debentures -Working Capital
|
A
Company can borrow money from the market for meeting its Working
Capital requirements by issuing Debentures. Normally such Debentures are
for short periods like 1 or 2 years. They could be either Secured or
Unsecured.
|
Debit and Credit Balances
|
have
been passed can be balanced. If the value of debit items is more than
that of credit items the account will show a debit balance and if the
value of all the credit entries in the account are more than that of
debit entries it will show a credit balance.
|
Debris Removal Clause
|
The
Clause, when attached to a standard fire and special perils policy, on
payment of an additional premium provides cover for an additional
amount, in excess of the limits prescribed in the standard fire policy,
as agreed to between the insurer and the insured towards costs and
expenses necessarily incurred by the insured for removal of debris
resulting from an accident.
|
Debt Service
|
Cash
required in a given period, usually one year, for payments of Interest
and current maturities of Principal, on outstanding debt. Project
financiers would require the owner of the project to take out insurance
for debt service also in the event of delay in the commencement schedule
of the project arising out of accidental damage to the project
materials.
|
Deceptive practice
|
Concealment
of actual fact. Eg. Insurance official or the agent giving impression
to the prospect of some coverage being provided in the policy while no
such coverage appears in the policy document
|
Decision Support System
|
A
part of the Management Information System that provides answers to
problems and that integrates the decision-maker into the system as a
component.
|
Decision Tree
|
Diagram that illustrates all possible consequences of different decisions at different stages of decision making.
|
Deck cargo
|
Cargo
carried on deck of a ship. Insurance on cargo is normally deemed to
apply only to cargo carried under deck unless specifically incorporated
in the policy to the effect that the cargo is carried on deck.
|
Declaration
|
Statements
in an insurance contract that provide information about the property or
life to be insured and used for underwriting and rating purposes and
identification of the property or life to be insured.
|
Declaration Clause
|
A
clause which appears in marine cargo insurance open policy or open
cover. This provides that all dispatches coming under the purview of the
open cover/open policy should be declared for insurance without
exception, whether arrived or not.
|
Declinature
|
Refusal of an insurer to accept a risk proposed for insurance or to renew an existing insurance
|
Deductible
|
The proportion of loss that the insured bears in respect of any claim. This will be in two forms, namely,
Amount of excess, which will be mentioned either as a fixed amount or a percentage of the sum insured or the claim amount. Time excess by which the insured will not be entitled to the claim relateable to a specific period (usually number of days) stated in the policy |
Deductible, period
|
Deductible
to be applied in respect of each claim expressed in the form of number
of days claim relating to which will not be payable under the policy.
|
Defeasible Interest
|
A
term relevant to marine adventure. An interest that may cease to exist
after commencement of voyage. e.g. an importer insuring the goods which
he bought from overseas seller, although he is entitled, if the seller
be guilty of delay or other default, to reject the goods, or treat them
at seller’s risk
|
Defendant
|
One
of the parties in a negligence law suit from whom the other party seeks
relief for certain wrong complained of by the latter to have been
committed by the former.
|
Defense Costs
|
Costs
and expenses incurred by the defendant in a law suit in connection with
defending the suit filed against him by the plaintiff (the party
seeking relief from the defendant)
|
E
Economic Limit in increased cost of working
|
The
term relates to the limit up to which the insurer will pay under a fire
consequential loss policy for the additional cost of working incurred
by the insured to avoid totally or partially, the reduction in turnover
during the indemnity period. Economic limit means the extent of gross
profit saved by the incurring of the additional cost of working.
|
E & O.E.
|
Errors and omissions excepted.
|
Each and Every Loss
|
Excess
of Loss Reinsurance arranged on “Any One Event” basis under which each
and every loss arising out of the one event will be accumulated and XL
recovery effected of such accumulated loss en excess of the underlying
loss retention of the reinsured. An event of loss is defined as 168
consecutive hours and each and every loss during that period is
aggregated as stated above for application EL recovery.
|
Each and every risk each and every loss
|
The
term relates to Treaty Reinsurance. The agreement provides for the
reinsured to determine what is one risk, (Ex. whether it is one building
or one group of buildings under one roof) and what is one loss. (Ex.
Limiting the period and geographical scope of a loss occurrence)
|
Earned Premium
|
The
portion of the premium which is the property of an insurance company,
based on the expired portion of the policy period. For example, an
insurance company is considered to have earned 75 percent of an annual
premium after a period of nine months of an annual policy has elapsed.
|
Earned Premium – Reinsurance
|
In
relation to reinsurance, is the premium ceded and included in the year
in question plus reserve for unexpired risk brought forward or portfolio
premium entry less reserve for unexpired risk at the end of the current
year or portfolio premium withdrawn.
|
Earthquake Fire and Shock
|
An
extension of cover provided to the standard fire and special perils
policy on payment of extra premium. Loss/damage to the insured property
caused by fire or shock or both resulting from earthquake is payable as
per this extension.
|
Earthquake Zone
|
For
the purpose of differentiating the more earthquake-prone areas from the
less-prone ones and providing different rating structures for the
earthquake cover under the Fire Policy.
|
Economic Life
|
Balance
of period for which a machine or other property will earn to its owner
more than the maintenance and/or the operating expenses for the same.
This is the prime factor which is taken into account while fixing the
market value of the item for insurance purposes.
|
Economic Loss
|
The
estimated total cost, both insured and uninsured, incurred by an
individual or family or a business house, arising out of the
consequences of any accident or mishaps (such as motor vehicle
accidents, work accidents, personal accidents and fires); includes such
factors as property damage, funeral expenses, wage loss, and medical,
hospital and legal costs as also third party liabilities
|
Economically Vulnerable or Backward Classes
|
As per IRDA Regulations, means persons who live below the poverty line.
|
Effective Date
|
The actual date on which the insurance coverage granted under an insurance policy will come into force.
|
Efficient level of risk
|
The
amount of risk remaining after an individual or business pursues
activities such as loss control, loss financing, and internal risk
reduction, to the point where marginal benefit equals marginal cost
|
Eight System
|
A
system followed in reinsurance in connection with Premium Portfolio
Adjustment for ascertaining unexpired risk liabilities. Policies issued
during the period of twelve months are segregated into eight blocks each
of one and half month. Then unexpired premium is computed by unexpired
risk period of each block.
|
Ejusdem generis
|
Means
“of the same kind”. Where general words follow specific words which
have a quality in common, the general words are considered to refer
merely to things of the same kind.
When the policy mentions a list of named perils and end the list with the words and all other perils such expression is subject to the legal principle of ejusdem generis and means only perils similar to the ones specified earlier. |
Electrical Clause
|
A
clause appearing as a part of the Geneal Exclusions in the Standard
Fire and Special Perils Policy relieving the insurer of liability for
loss or damage to any electrical and/or electronic equipment or
installation arising from over-running, excessive pressure short
circuiting, arcing, self heating or leakage of electricity, from
whatever cause. But the damages to any adjacent insured item consequent
upon such over-running etc. is payable under the policy.
|
Electronic Equipment Insurance
|
Policy
which provides coverage against sudden and unforeseen material damages
to any electronic equipment due to any cause, subject to certain
exclusions. Broadly the cover is against Fire and Allied Perils,
Explosion, Machinery Breakdown, short circuit and other electrical
causes theft, burglary, water damage, humidity, faulty operation, gross
negligence, lack of skill, falling object , entry of foreign bodies,
etc. The policy is also extended to cover loss or damage to the external
data media as also the cost of reconstruction of data on such external
data media. Further coverage is also provided for additional expenditure
incurred as a result of the result of the failure of the electronic
system necessitating the use of a substitute system. The policy will be
subject an excess in respect of claims on all the above heads.
|
Embargo
|
A governmental prohibition, either on political considerations or economic reasons against shipping movement, cargo or trade.
|
Embargo
|
Prohibition
by the government for shipment of certain goods or merchandise to
another country. Marine Insurance of such goods to such country will not
be considered legally valid.
|
Embezzlement
|
Fraudulent use or misappropriation of another’s property or money which has been entrusted to one’s care.
|
EML Underwriting
|
Term
used in connection with Engineering Reinsurance where the ceding
company’s retention and the treaty reinsurers’ share are assessed as a
percentage of the Estimated Maximum Loss arising out of one loss event.
|
Employee (BBI Ins.)
|
The
term ‘employee’ is deemed to mean all existing employees (officers,
clerks and sub-staff) whether permanent or temporary, whole time or part
time, on contract or otherwise, including apprentices, on the salary
roll of the bank at all its offices, but shall not include any director
or partner other than salaried.
|
Employer Form
|
Refers,
in relation to the Fidelity Guarantee Insurance, to a form to be
completed by the insured (employer) which is in the nature of a proposal
form and which will form the basis of the contract. This will seek for
details about the employer as also the the nature of the duties of the
employee who should be guaranteed, the system of check in the company
past defalcation if any by the employee etc. At the end, the insured
will make a declaration certifying to the truthfulness of the statements
made by him.
|
Endorsement
|
Memorandum
issued in connection with effecting some additions, alterations or
deletions in the terms of coverage granted under the standard form of
policies, either at the time of issue of the standard policy at the time
of commencement of insurance or any time during its currency based on
mutual agreements between insured and insurer. This will be signed by
the authorised signatory of the insurer and once issued, the policy and
the endorsement together will constitute the evidence of the contract.
|
Energy Insurance Package Policy
|
against all the risk exposures connected with the Oil and Energy Risks.Coverage is under five sections as per details below:
1) Property Insurance Coverage for all off shore property comprising
of Platform, Pipelines, Materials on Board Rigs, Cargo, Drill Barges and
Drill Ships, Multipurpose support vessels and Seismic and other
vessels-Cover including War and Strike Risks.2) Property Insurance Coverage for all onshore property, including Land Rigs and Drilling Equipment 3)Expenses of Well Control 4) Third Party Liabilities, comprising of Specified Offshore and Marine Liabilities and other liabilities 5) Terrorism Coverage in respect of all interruptions In view of the complexities of the risk and substantial reinsurance requirement, the coverage is always finalised under the direct involvement of the reinsurers right from the beginning and the cover granted as per international practices. |
Energy Treaty
|
Reinsurance
Treaty in respect of offshore drilling rig platforms In an Oil Field in
the deep seas pipelines for oil supply to onshore storage units,
refineries etc. which are defined as Marine Hull Offshore Business
|
Entrepot trade
|
The
term refers to import of goods for purposes of immediate re-export to
anothr country. Goods imported under this arrangement are not subject to
import duty.
|
Environment
|
As
defined in the National Environment Tribunal Act,1995, includes water,
air, and land and the interrelationship which exist among and between
water, air and land, and human beings, other living creatures, plants,
micro-organism and property.
|
Environment (Protection) Act 1986
|
A
comprehensive umbrella legislation for enforcement of measures for
protection of the environment and for co-ordination of the activities of
the Central and State Pollution Control Boards constituted under the
Water and Air Acts.
|
Environment Relief Fund
|
Fund
established as per the provisions of the Public Liability Insurance
Act, 1961. The relief fund shall be utilised for paying relief under the
award made by the Collector under the Public Liability Insurance Act
and shall meet the excess over the amount paid under the insurance
policy
|
Environmental Damage
|
The
injurious presence in or on land, the atmosphere, or any water course
or body of water of solid, liquid, gaseous, or thermal contaminants,
irritants, or pollutants.
|
Environmental Impairment Liability Insurance
|
Coverage designed to cover losses and liabilities arising from damage to property by pollution.
|
Environmental Pollutant
|
Any solid, liquid or gaseous substance present in such concentration as may be or tend to be, injurious to environment
|
Environmental Pollution
|
The presence in the environment of any environmental pollutant.
|
Environmental Risks
|
Risks
attributed to the release of contaminants into the air and the disposal
of industrial wastes on land and into water courses.
|
Equipment Leasing
|
Equipment
purchased and leased out to another. Owner benefits by the lease rental
as also by tax benefits. Insurance Policies for the leased property
will be issued in the name of the owner only but the lessee’s interest
can be noted in the policy if required by the parties.
|
Equitable interest
|
An interest recognisable at law.
|
Erection All Risks Insurance
|
Policy
intended to cover the projects whilst in course of construction. The
policy provides coverage to all project machinery and materials against
all risks, subject to certain named exclusions. The cover is extended to
include all civil engineering works connected with the project,
insured’s surrounding property and third party liability. The period of
the policy will commence from the arrival of the first consignment of
the project materials at the site of erection and continue until the
erection and testing is completed and the project commissioned. The sum
insured will represent the estimated completed value of the project.
Suitable amounts of coverage will have to be chosen by the insured for
surrounding property and third partly liability coverage. This policy is
wholly governed by Tariff.
|
Error, Omission & Alteration Clause
|
A
Clause in proportional treaty wordings which provides that any
accidental or inadvertent error or omission shall not prejudice the
treaty and the same will be corrected as soon as possible and necessary
adjustments will be made.
|
F
F.A.S. (Free Alongside Ship)
|
||
One
of the terms of contract of sale where the seller has the
responsibility to place the goods on the quay alongside the ship upto,
which point, they remain at his risk. The transport cost up to that
point is borne by him. Once goods are so placed the risk gets
transferred to the buyer including all further costs.
|
||
F.C.&S Clause
|
||
A
standard clause in a marine insurance policy by which the insurer
excludes coverage of loss due to “capture” and “seizure” as well as
“arrest, restraint or detriment, and the consequence thereof or of any
attempt thereat (piracy excepted), and also from all consequences of
hostilities or warlike operations, whether before or after declaration
of war.”
|
||
F.C.A. ((Free Carrier)
|
||
One
of the terms of contract of sale where the seller has the
responsibility to deliver the goods to a carrier to be named by the
buyer at a place also to be notified by the buyer. The goods are at risk
of seller till such delivery and the risk thereafter is transferred to
buyer including further costs.
|
||
F.I.R.
|
||
First
Information Report lodged with the Police Authorities in case of a Fire
or Explosion or Burglary in the insured premises or Road accidents
involving third parties. This is one of the documents of claim,
especially when claims for third party liabilities are lodged under the
policy.
|
||
F.O.B.
|
||
One
of the contracts of sale relating to imports or exports, where the
seller is responsible to place the cargo on board the ship and obtain
the bill of lading from the steamer company. Thus he becomes responsible
for any loss to cargo prior to its being placed on board the ship. It
is for the buyer to arrange for marine insurance for cargo for the
voyage and until it reaches the destination. In normal practice the
buyer in F.O.B. contracts insures the cargo from warehouse to warehouse.
|
||
F.O.B. Insurance
|
||
An
Insurance cover taken by the seller of the cargo to protect his
interest from the time it leaves his premises and until it is placed on
board the ship and a clean bill of lading is obtained.
|
||
Factual Expectation
|
||
A
fair and strong expectation of an occurrence happening resulting in
someone getting an insurable interest in a property in due course. In
marine insurance a person can insure a cargo in which he does not have
an insurable interest at the time of proposing for the cover but he will
have a factual expectation of acquiring such an interest at a later
date.
|
||
Facultative Obligatory Open Cover
|
||
This
is similar to Facultative Obligatory Treaty but with only one
difference. This has no line limitation whereas the Facultative
Obligatory treaty has.
|
||
Facultative Obligatory Treaty
|
||
An
agreement whereby the ceding company has option to cede (not bound to),
as in the case of pure facultative placements but the reinsured is
bound to accept (no option to decline), as under a treaty arrangement, a
share of a specified risk underwritten by the ceding company. This
treaty has thus both the characteristics of facultative cessions and of
obligatory treaties. It normally comes after surplus treaties and gives
automatic reinsurance facilities to the ceding company when the capacity
of the surplus has been exhausted.
|
||
Facultative Reinsurance
|
||
Oldest
method of reinsurance. Each risk is considered separately and
reinsured. It is necessary for the insurance company to supply the
reinsurer all the material information about the risk to enable the
latter to decide about acceptance of reinsurance and the extent thereof
as also the rate.
|
||
Failed Well Insurance
|
||
Coverage
providing compensation to the insured if a dug well fails to yield
specified quantity of water. Compensation is also payable for collapse
of aside walls whilst digging is in progress.
Insurance provided for both open wells and bore wells but for new wells only. |
||
Failure of brakes
|
||
Breaks
of the insured vehicle failing to perform their function leading to a
road accident. Only consequential damages are covered under the policy.
|
||
Failure of Consideration
|
||
Occurs
when the risk for which the insurer has accepted the premium fails to
attach. The full premium paid is returnable in such circumstances,
except where there is a fraud
|
||
Fair Market Value
|
||
Price
at which an asset or a service passes from a willing seller to a
willing buyer, where both seller and the buyer are assumed to be
rational and have a reasonable knowledge of the relevant facts.
|
||
Fair Value Exchange Account
|
||
A
new account created as per the IRDA Regulations. As per the
regulations, Listed Equities, Securities and Derivative Instruments
shall be the assessed for the fair value on the date of the Balance
Sheet. The fair value is the lowest of the quotations to those
securities or instruments in any of the stock exchanges. An Insurer has
to compare such fair value with the book costs and any impairment in the
value has to be transferred to the Fair Value Exchange Account. All
unrealised gains and losses due to changes in the fair value of the
Instruments have to be taken to the Fair Value Exchange account and as
and when these gains or losses are realised, the same will be
transferred to Profit and Loss A/c.
|
||
Fall or Displacement of building clause
|
||
A
provision appearing in the Standard Fire and Special Perils Policy to
the effect that all insurances under the policy shall cease on expiry of
seven days of fall or displacement of any insured building or part
thereof or of the whole or any part of any range of insured buildings or
of any structure of which such building forms part. Also known as
“Fallen Building Clause”
|
||
Family Coverage
|
||
Property
and/or personal lines of insurance where in addition to the individual,
his or her dependants are also covered as insured persons.
|
||
Farmers Package Cover
|
||
A
comprehensive package insurance for the benefit of the farmers to cover
the individual, his/her family members, property in the house, animals,
animal driven carts, agricultural tractors etc. against all accidental
loss or damage and accidental death and injury.
|
||
Fatal Accidents Act, 1855
|
||
Act
which provides that, if the death of a person is caused by wrongful
act, neglect, or default, an action for damages is maintainable by the
legal heirs of the deceased against the party causing injury. This act
abolished the long standing rule of common law according to which a
civil action for damages died with the person to whom or by whom the
tort was committed.
|
||
Fathom
|
||
Measurement for assessing sea depth on the basis that one fathom equals 1.8288 metres.
|
||
Field Staff
|
||
Company
staff whose work is mainly outdoors and comprises of soliciting and
procuring insurance business either directly or through the medium of
insurance agents. They are remunerated by monthly salary and allowances
like any other company employees but in addition are paid growth and
profit incentives in relation to the business procured by them. They
also enjoy certain perks. This cadre exists as of now, only in the four
nationalised insurance companies and is governed by a special scheme
known as ‘Development Officers’ Scheme’.
|
||
File and Use Procedure
|
||
Formal
submission of an insurance product with full details of coverage and
rates, terms and conditions applicable to the Regulator before marketing
the product. If no reply comes from the Regulator within the specified
period the product is deemed approved.
|
||
Financial Reinsurance
|
||
A
substitute to the conventional reinsurance where funding is used as a
technique to spread loss or profit over a period of years after discount
for handling costs, fees, commission etc. It is mostly used as a
complementary arrangement for traditional reinsurance where full
capacity is not available.
|
||
Financial Risks
|
||
Risks
solely associated with finance extended or received, in different
forms, by an individual or an enterprise, resulting in the beneficiary
of finance not carrying out or not being able to carry out his/its
financial obligations under the contract. Certain financial risks are
insured by general insurers.
|
||
Financial Underwriting
|
||
A
method of evaluating the results of a reinsurance treaty. Under this
method factors like interest earned on the premium income and loss or
gain in foreign exchange are also taken into account.
|
||
Finished Goods
|
||
Products or goods which have been fully manufactured, assembled or built and are ready for sale.
|
||
Fire
|
||
A combustion accompanied by a flame or glow, which escapes its normal confines to cause damage.
|
||
Fire & Theft Risks
|
||
In relation to motor insurance, refers to the restricted cover extended to a vehicle which is in garage and out of use.
|
||
Fire and Allied Perils
|
||
A term which by convention is used to denote the following perils in addition to Fire
- Lightning - Explosion/implosion - Aircraft Damage - Riot, Strike, Malicious and Terrorism Damage - Storm, Cyclone, Typhoon, Tempest, Hurricane, Tornado, Flood and Inundation - Impact Damage - Subsidence and Landslide including Rock slide - Bursting and/or overflowing of Water Tanks, Apparatus and Pipes - Missile Testing operations - Leakage from Automatic Sprinkler Installations - Bush Fire - Earth Quake |
||
Fire Brigade
|
||
Group of people specialised/trained in extinguishment of fires.
|
||
Fault tree Analysis
|
||
A
diagram of cause and effect relationships, showing the outcome, if a
particular course of action is taken or continued. This method of
analysis is increasingly used in engineering accident cause and
prevention.
|
||
Faulty Design
|
||
Term
relating to Builder’s Risks Insurance. The relevant clause when
attached to the Builder’s Risks Insurance Policy provides cover for loss
or damage to the insured property arising from faulty design of any
part or parts thereof but does not extend to cover any repairing,
modifying, replacing or renewing such part or parts, nor any cost or
expense incurred by reason of betterment or alteration in design.
|
||
Favoured Reinsurance Terms
|
||
Reinsurers
sometimes insist that reinsurance treaty terms should be same for all
reinsurers of a treaty in non-reciporcal trading. There should be no
discrimination by concessions to a few. Reinsures accept a share subject
to ‘favoured reinsurer’s terms’
|
||
FEA Discount
|
||
Discount
granted as per tariff for installation of Fire Extinguishing Appliances
in the insured premises. Dis count ranges from 2.5% to 10% on the
premium depending upon the installations
|
||
Feasibility Study
|
||
Study
carried out to decide workability of a project from various factors
relating to physical, economical, environmental, political etc. aspects.
Such a study is normally undertaken with the help of experts in various
fields.
|
||
FGU Losses
|
||
“From
Ground Up” Losses – A term used in connection with Excess of Loss
Reinsurance, which refers to the incurred losses of protected portfolio
of an XL cover which are also the ultimate net loss for the XL cover.
|
||
Fidelity Exclusion
|
||
1. A provision in burglary and money insurance policies excluding loss caused by the infidelity of the employees of the insured.
2. A provision in liability and professional indemnity policies excluding coverage for dishonest act of the insured. |
||
Fidelity Guarantee Policy
|
||
An Insurance Policy which reimburses an employer for losses caused by dishonest or fraudulent acts of employees.
|
||
Fiduciary
|
||
A person who holds something in trust for another.
|
||
Fiduciary Relationship
|
||
Relationship arising when a person holds something in trust for another.
|
||
Fire Engine
|
||
A
motor truck equipped with water tank, pipes etc. to spray water,
chemicals etc. on fires to put them off. If fire engines are maintained
by the insured, a discount is given on the fire premium rate in
recognition of the said feature as a risk improvement feature.
|
||
Fire Extinguisher
|
||
Instrument that uses non combustible substances like carbon dioxide to extinguish a fire, by depriving it of oxygen.
|
||
Fire Hazards
|
||
The
physical or chemical properties of a matter of whatever state which
makes it susceptible to the risk of fire in varying degrees.
|
||
G
Gainful Employment
|
A
term used in connection with the Permanent Total Disablement condition
under a personal accident insurance policy. The disablement is of
permanent and irrecoverable nature and is absolutely total, in the sense
that the insured person is prevented from engaging in any employment,
which would gain him financial benefits. (Ex. Paralysis)
|
Garbling Clause
|
The
clause, in relation to marine/transit insurance of commodities like
tobacco, coffee beans or grain, provides that the insurer will pay the
cost of garbling (sifting and cleansing to separate sound from the
whole), as such an exercise prevents further damage and reduces the
claim.
|
General Average
|
A
loss, which arises in consequence of extraordinary sacrifices made, or
expenses incurred for the preservation of the ship and cargo in time of
common peril comes within General Average and must be borne
proportionally by all those interested in the adventure. The principle
of General Average forms part of Maritime law and is applicable whether
or not the parties to a maritime adventure are insured.
|
General Average contribution
|
The
monetary contribution required of ship owners and cargo owners in
respect of general average expenditures and general average sacrifices.
The underwriter is liable for the general average contribution paid or payable by the assured when the general average act is performed to prevent loss from an insured peril. Such liability however is limited to the proportionate amount of the contribution payable by the insured, if the contributory value of the interest is more than the insured value. |
General Average Counter Guarantee
|
When
the ship owner declares General Average, he insists on production of an
unlimited guarantee to be provided by underwriters. The underwriters
issue unlimited guarantee against the assureds counter guarantee whereby
he commits to reimburse the underwriters the overpayment resulting from
underinsurance. When the Adjustment is completed, the insurers first
pay the contribution payable by the insured interest. If the
contributory value of the insured interest happens to be more than the
sum insured, the counter guarantee is invoked by the insurers and the
insured is asked to pay back the excess amount paid on his behalf.
|
General average Deposit
|
In
the absence of any acceptable form of guarantee, the receiver of the
cargo will be required to pay a deposit into the general average fund
before taking delivery of the cargo. The amount to be paid as a general
average deposit is usually slightly higher than the estimated
contribution. A deposit receipt is issued against the money thus
deposited and the deposit earns interest. When the adjustment is
completed, the holder of the deposit receipt is paid the difference
between the deposit plus accrued interest, and the contribution.
|
General Average Essentials
|
(1) The whole adventure must be in peril
(2) The peril must be imminent(3) The act must be voluntary (4) The act must be reasonable and prudent (5) The act must be for saving all the interests involved (6) The sacrifice or the expenditure must be extraordinary in anture |
General Average Expenditure
|
An
extraordinary expenditure incurred by the shipowner intentionally and
reasonably to preserve from peril the property involved in a common
maritime adventure (e.g. port of refuge expenses, salvage remuneration,
etc.) is known as General Average Expenditure. Such an expenditure is
recoverable from the general average fund but not directly from the
underwriters. The underwriters liability for such expenditure would be
only that part of the expenditure that related to the general average
contribution payable by the insured interest.
|
General Average Fund
|
A
Fund created by the shipowner and the average adjuster appointed on the
declaration of general average, from out of the deposits collected in
connection with the general average adjustment. Shipowner has authority,
without waiting for the final adjustment, to draw from the fund for
general average expenditure.
|
General Average Guarantee
|
Where
the cargo underwriters are prepared to commit themselves to paying the
contribution assessed against the insured cargo owner, they will give a
written guarantee to pay the contribution attaching to the insured
interest. Such guarantee is acceptable to the shipowner only if it
guarantees payment of the full contribution assessed against the insured
cargo. The underwriters issue such an unlimited guarantee after
obtaining from the insured a counter guarantee to reimburse the
underwriters for any overpayment due to under-insurance.
|
General Average Loss
|
A
general average loss is a loss caused by or directly consequential to a
general average act. It includes general average expenditure as well as
a general average sacrifice.
|
General Average Refund
|
This
relates to the difference between the General Average Deposit collected
and the actual general average contribution in respect of any interest
saved by general average measures. Such refund is payable only to the
party who holds the deposit receipt.
|
General Average Sacrifice
|
Sacrifice of one or more interests involved in the adventure for saving rest of major interests
|
General Damages
|
Damages
awarded to an injured person for intangible loss which does not readily
lend itself to quantitative measurement. Frequently called pain and
suffering. General damages are distinguished from special damages which
are awarded for actual economic loss, such as medical costs,legal
charges, cost of repairing/replacing damaged property, loss of income,
etc.
|
General Insurance Business
|
means fire, marine or miscellaneous insurance business, whether carried on singly or in combination with one or more of them
|
General Liability Insurance
|
Coverage
that pertains, for the most part, to claims arising out of the
insured’s liability for injuries or damage caused by ownership of
property, manufacturing operations, contracting operations, sale or
distribution of products, and the operation of machinery, as well as
professional services
|
General Operating Expense
|
Administrative
expenses incurred by an insurance company which does not include
agents’ commission and taxes paid by the company.
|
Geographical Limitation
|
Territorial jurisdiction of the insurance coverage.
|
Ghost Animals
|
Animals
which do not exist. It is possible that insurance is taken for animals
that do not exist and subsequently putting in a claim by falsifying the
records and claim documents.
|
Ginning
|
A
process related to the cotton commodity. Cotton staples will be combed
in order to remove the cotton seed. This process will be carried out in
the ginning section of the factory. The process increases the fire
hazard.
|
Gold Clause Agreement
|
This
is an agreement entered into by insurers, shipowners and merchants
associations who are members of the British Maritime Law Association in
the year 1950 to increase the per package limit of liability of the
carriers from Pound Sterling 100 to 200 and to extend the time limit for
bringing action against the carriers from 1 year to 2years. The
agreement bound the signatories to bring action in the UK even though
the bill of lading may provide for jurisdication elsewhere. This
Agreement, however, does not exist now.
|
Golfers Equipment Insurance
|
A
special cover for Golfers (non-professional) covering the golfing
equipment against accidental loss or damage, whilst in golf course or in
transit, personal effects of the insured against Fire and Theft while
in or at any golf club and liability of the insured against any third
party for bodily injury and/or property damage while playing or
practicing golf by the former in any golf course.
|
Goods
|
“Goods”
means goods in the nature of merchandise, and does not include personal
effects or provisions and stores for use on board
|
Goods Carriage
|
Means
motor vehicle constructed or adapted for use solely for the carriage of
goods, or any motor vehicle not so constructed or adapted when used for
the carriage of goods.
|
Goods In Trust or on Commission
|
The
person who holds the property of another either in trust or commission
is deemed to posses an insurable interest in such property> he can
accordingly insure them in his name.
|
Goods sent on approval
|
One of the terms of sale of goods. Here the property in the goods passes from the seller to the buyer
a) When the buyer signifies his approval to the seller or does any act adopting the transactionb) If he does not signify his approval but retains the goods without giving notice of rejection within the time stipulated in the contract, or if no time has been fixed, within a reasonable time. Seller has insurable interest in the goods until one of the above two alternatives takes place. |
Goodwill
|
Reputation
of a business, expressed in monetary value. Normally Goodwill is not
insured by the property insurers as there is no yardstick by which it
can be measured.
|
Graded Retention
|
Any
One Risk Retention in a pro-rata treaty are ‘top’ and graded. This
would mean that the direct insurer has a maximum limit of retention
which may reduce in respect of specific cases of risks based on
qualitative analysis of the risks. Reduction in retention means
corresponding reduction in surplus treaty capacity also because of line
limitation.
|
Gramin Personal Accident Insurance (G.P.A. Policy)
|
A
special personal accident insurance policy introduced for the benefit
of the people living in rural areas of the country. With a sum insured
per individual as Rs.10,000 at a premium of rs.5 only the policy
provides cover against death, loss of limbs and/or eyes and permanent
total disability arising out of any accident.
|
Grievous Injury
|
Any
injury that endangers the life of the person or causes the sufferer to
be in severe bodily pain or unable to follow his ordinary pursuits for a
number of days. This term is specifically used in connection with “Hit
and Run” motor accident cases where a specified compensation is payable
for grievous injuries.
|
Gross Domestic Product
|
Measurement of the values of all goods and services produced in a period of a year.
|
Gross Loss
|
Loss incurred by the Direct insurer for the 100% of any one risk insured by him
|
Gross National Product (GNP)
|
Total
final value of goods and services produced in a national economy over a
particular period of time, usually one year. The GNP growth rate is the
primary indicator of the status of the economy.
|
Gross Negligence
|
Reckless action without any regard to consequences.
|
Gross Net Premium Income
|
When
net account of a company is protected by an XL Cover, the premium for
the net account is pro-rata to the line retained on risks. Such net
account premium is Gross Net Premium of the Company. The word gross
signifies that the premium is before any deductions
|
Gross Premium
|
The premium paid by the policyholder
|
Gross Profit
|
The
sum insured in respect of the Consequential Loss Policy is based on the
Gross Profit of the business. It represents the sum total of the Net
profit and the insured standing charges, or if there be no Net profit,
the amount of the insured standing charges less such proportion of any
trading loss as the amount of the insured standing charges bears to all
the standing charges of the business
|
Gross Rate
|
The sum of the pure premium and a loading element.
|
Gross Vehicle Weight
|
Means
in respect of any vehicle, the total weight of the vehicle and load
certified and registered by the Registering Authority as permissible for
the vehicle
|
Ground
|
The term is deemed to include all periods during which the aircraft is not in flight, taxying or moored
|
Group Discount
|
Discount
allowed in the premium arrived as per manual or prospectus rates
depending upon the number of persons covered under a Group Personal
Accident or Group Medicalim Insurance Policy. Group Discounts are also
allowed in the Industrial All Risks Policy, Householder’s Comprehensive
Insurance Policy, Shop Keeper’s Package Policy also, where the discount
depends upon the number of sections of coverage availed.
|
Group Insurance
|
Insurance
coverage for a group of individuals engaged in some common activity.
Ex.Employees of an organisation, members of an association of
professionals, farmers registered as a society for rural activities etc.
Insurers issue group policies in accident insurance, medical insurance,
professional indemnity insurance, etc.
|
Group Mediclaim Insurance
|
Mediclaim
Insurance Policy issued in favour of an enterprise or an organisation
or any employer, to cover their employees and dependants. These policies
are also issued to associations, clubs etc. for the benefit of their
members. The essential requisitst for a group policy are: Some common
relationship among the persons to be insured and a central point for
administration of the policy scheme.
|
Group Personal Accident Insurance
|
Personal
Accident Insurance Policy issued in favour of an enterprise or an
organisation or any employer, to cover their employees ( and dependants
also sometimes). These policies are also issued to associations, clubs
etc. for the benefit of their members. The essential requisitst for a
group policy are: Some common relationship among the persons to be
insured and a central point for administration of the policy scheme.
|
Growth Rate
|
Percentage
change in the quantum of business when compared with the business in a
base year. Growth rate in business of every year over the business in
the previous year is assessed by the insurance companies to assess the
business performance vis a vis the target fixed, analyse the reasons for
shortfall if any, and to take corrective measures as are needed. Growth
Rates in business of the individual Field Personnel is also assessed,
every year, for ascertaining the individual employee’s eligibility for
annual increment and growth incentive as per scheme.
|
H
Hazardous substance
|
In
relation to The Public Liability Insurance Act, 1991, means a list of
chemicals with quantities categorized as hazardous substances and
published in the form of a Notification by the Central Government for
application of Public Liability Insurance Act. The Act Provides for
public liability insurance for the purposes of providing immediate
relief to the persons affected by accident occurring while handling
hazardous substance (See “Public Liability Insurance Act. 1991″)
|
Hit and run motor accident
|
Accident
arising out of the use of motor vehicle or motor vehicles the identity
whereof cannot be ascertained in spite of reasonable efforts for the
purpose.
|
Hague Rules
|
Following
an International Maritime Law Conference in Brussels in 1922 a set of
rules was agreed to establish the rights and immunities of carriers in
respect of the carriage of goods by sea. Many of the countries agreeing
to the rules later incorporated them in statutory Acts, such as the
Carriage of Goods by Sea Act, 1924.
|
Hail Risk Insurance
|
Insurance against Hailstorm for Crops given as a part of the Crop Insurance Cover.
|
Hand Appliances
|
Any
of the portable fire extinguishing devices containing chemicals to put
out a fire. Hand appliances are basic requirements for a risk to be
considered for a discount in the fire premium rating under a Standard
fire and special perils policy. (See “F.E.A. Discount”)
|
Hard Market
|
Market
Situation where competitive pricing is at a minimum as companies charge
the premiums necessary to meet their underwriting losses in order to
avoid insolvency and boost capacity; usually associated with a sharp
decline in capacity. See also Soft Market
|
Hazard
|
A condition which may create or increase the chance of loss arising from any peril
|
Hazardous Goods
|
Goods
in any state (solid, liquid or gas) susceptible to the risk of fire in
varying degrees according to their physical properties. Hazardous Goods
are categorised as I, II, III and IV and rated accordingly, for the
purpose of insurance, under the Standard Fire and Special Perils Policy.
|
Hazardous Risks (Fidelity Guarantee Insurance)
|
Risks
considered not good for insurance because of the very high hazard
associated therewith and the high incidence of claims. (Ex. Jewellery
Sales persons, Cashiers in eating houses, cinema houses and other places
of entertainment, Treasurers of societies or associations, employees of
bullion merchants and of works of art dealing in antiques fur and
valuables.)
|
Hazardous Sports
|
In
relation to Personal Accident Insurance, refers to sports activities
which carry with them high hazard, like racing on wheels or horseback,
big game hunting, maountaineering, winter sports, skiing, ice hockey,
balooning, hang gliding, river rafting, polo etc. Persons engaged in
these sports are classified as high risk groups and attract extra
premium over normal, if the proposal is accepted by the insurer.
|
Health Insurance Business or Health Cover
|
Means
the effecting of contracts which provide sickness benefits or medical,
surgical, or hospital expense benefits, whether in-patient, or
out-patient, on an indemnity, reimbursement, service, prepaid, hospital
or other plans basis, including assured benefits and long-term care.
|
Heating and Sweating
|
The
former is a risk which exists in respect of cargo prone to heating by
spontaneous combustion.e.g. Coal, oil cakes etc. in bulk. Sweating
refers to the water damage caused by condensation of water in the vessel
or container hold, under circumstances of different
climatic/atmospheric conditions during the voyage.
|
Heating or drying process
|
A
process carried out in a manufacturing unit where by certain property
is heated and dried to remove the water contents. Any loss/damage to the
property due to over heating or drying is not covered under a standard
fire and special perils policy.
|
Heavy Industry
|
Traditional
Production Industries in the automobile, steel, rubber, petroleum and
raw material areas, requiring high capitalisation and producing large
quantities of output. Heavy Industry employs many people and is often
beset with environmental impacts.
|
Hedging
|
Strategy
adopted by importers or exporters in connection with future purchases
or sales, to overcome the loss caused by price increase or decrease as
the case may be due to exchange fluctuations. Protection is obtained by
hedging against exchange movements by entering into forward contracts.
|
Hold-up
|
Robbery with violence or threat of violence. A risk which is covered under the Standard Burglary Insurance Policy
|
Homogeneous Exposures
|
Risks
within a group under study that have, to a great extent, uniform
characteristics as regards exposure to similar loss events and
expectation of losses. Study of homogeneous exposures is carried out for
the purpose of fixing rates of premium and terms and conditions in
connection with insurance coverage
|
Homogenous Risks
|
Properties,
interests or activities which are exposed to mostly similar types of
perils and which normally meet with similar loss situation in the event
of such perils occurring. Insurers consider homogenous nature of risks
by evaluating them according to a) cause and b) effect with the aim of
quantifying probabilities and severity in order to fix uniform rates of
premium, terms and conditions coverage etc.
|
Honey Bee Insurance
|
Coverage
for hives and/or bee colony belonging to the co-operative societies
against all accidental losses or damages to them. Settlement of claim is
as per agreed value representing the cost of hive and cost of bee
colony which will be attached to the policy in the form of a valuation
table.
|
Hospital Confinement Indemnity Insurance
|
Insurance
Coverage to provide for a fixed compensation on a daily basis for the
period of treatment in a hospital or a nursing home by the insured for
any illness, injury or sickness, as against the conventional mediclaim
policies which provide for reimbursement of actual expenses incurred for
treatment.
|
Hospitalisation
|
Admission of a patient in a hospital or a nursing home and treatment to him for injury, illness, sickness or disease.
|
Hospitalisation Insurance
|
Insurance
Coverage to individuals providing for reimbursement of expenses
incurred towards hospitalisation treatment in connection with any
injury, illness, sickness or disease. The cover is extended for
domiciliary hospitalisation also under ceratin conditions. Individuals,
as also their dependants can be covered under the policy.
|
Hostile Fire
|
A
fire which does not confine itself to its normal bounds and spreads
beyond its habitat. For example the fire in the gas stove spreads to the
nearby items and results in a big fire. A Hostile Fire is covered under
the policy which is extended to cover Fire Risks.
|
Hot Testing
|
In relation to project insurance, refers to
I) operational tests, which include the checking of parts, elements
and/or production lines of insured property under full or partial load
and normal or simulated operating conditions including the use of
feedstock or other material for normal processing or other media for
load simulation. In electrical power stations hot testing means checking
after connection to a grid or other load circuit of electrical
generating, transforming, converting or rectifying equipment.II) commissioning tests/acceptance tests which in turn mean operation of insured property under production conditions for the purpose of attaining (quantity, quality) specification requirements. |
Hours Clause
|
A
Clause incorporated in XL Reinsurance wordings to define Any One Event
of Loss for the purpose of loss recoveries from the XL Cover. As per
this clause Any One Event is defined by consecutive number of hours as
per details below:
72 consecutive hours are taken as one event for Storms, Earthquake, Tidal waves, Seaquake, Volcanic Eruption.168 consecutive hours are one event in case of floods. Man-made catastrophic losses caused by riots and civil commotion are defined as 72 consecutive hours for one event in any one city. 168 consecutive hours are taken as one event for any other catastrophe. |
Housebreaking
|
”
A person is said to commit house breaking who commits house trespass if
he effects his entrance into the house (or any part of it), for the
purpose of committing an offence, or having committed an offence
therein, he quits the house (or any part of it), such entrance or exit
being made in the six ways as described in the Penal Code”
|
Householders Comprehensive Insurance
|
A
package of insurance designed to provide householders with a broad
range of property and liability coverage, pertaining to events at home
as well outside.
|
Hull Insurance
|
Insurance on the ship, its machinery and equipment
|
Hurricane
|
A
tropical storm marked by extremely low barometric pressure and circular
winds with a velocity of 125 Kilometers an hour or more.
|
Hurricane Insurance
|
Part
of a group of perils namely “Storm, Cyclone, Typhoon, Tempest,
hurricane, Tornado, Flood and Inundation” which is inbuilt in the
coverage under the Standard Fire and Special Perils policy. This group
of perils can, however, be opted out by the policyholder, if he desires
to reduce premium cost.
|
Hut Insurance
|
An
insurance coverage to dwelling huts in rural areas constructed with
financial aid from Banks/Co-Op/Govt. Institutions. Cover is against
Fire, Earthquake, Flood and Inundation, Storm, Impact damage , Riot and
Strike, Terrorism, Malicious damage etc. Huts are insured for an agreed
value of Rs.6000/- each.
|
Hydrant System
|
A
large discharge pipe system with valves at various places for drawing
water from a water-main. Installation of Hydrant System together with
the existence of Hand Appliances will entail the insured to a discount
in the premium rate under the standard fire and special perils policy.
|
I
Immediate Repairs
|
Vehicle
needing minor repairs to be carried out following an accident when
without that it can not be moved from the place of accident to the
repairer’s garage. This expenditure incurred by the insured is allowed
under the policy lest there should be aggravation of damage to the
vehicle if not removed immediately.
|
Impact Damage
|
A
part of the cover under the Standard Fire and Special Perils Policy.
Cover is against loss or damage to the insured property caused by impact
by any Rail/Road vehicle or animal by direct contact not belonging to
or owned by
a.the Insured or any occupier of the premises or b.their employees while acting in the course of their employment |
Implied Warranty
|
An
implied warranty is not expressed in the policy specifically but which
is understood by both parties to be forming part of the contract and
binding on both. An implied warranty must be strictly complied with. In
the event of a breach of the warranty the insurer is discharged from
liability as from the date of the breach, but the insurer may waive the
breach or the breach may be excused by statute. Due diligence is an
example of implied warranty in respect of all policies. Seaworthiness
and Legality of Adventure are two examples in relation to Marine
Insurance
|
Implosion
|
Bursting
of a property inwards due to a sudden decrease in pressure. Loss/damage
to the insured property due to implosion is covered under the standard
fire and special perils policy.
|
Identification of Animal
|
The
methods used for recognition. Identification of the animal at time of
insurance is essential so that the claim is settled only for the animal
to which the cover was provided.
|
Important Notice
|
It
is customary to attach a red line clause called as Important Notice to
the certificates and policies of insurance to guide the insured
regarding claims procedure This clause deals with the duty of the
insured to minimise losses and preserve recovery rights, arrangement of
survey and documentation of the claims.
|
Improvement
|
Any
betterment effected in either a building or equipment through
expenditure of money or labour which is more than required for a mere
replacement or repair or restoration to the original condition. Property
insurance policies do not normally cover the increase in cost incurred
for any such improvement in an item which was affected by an insured
peril.
|
Imputed Negligence
|
Case in which responsibility for damage can be transfered from the negligent party to another person, such as an employer.
|
In course of employment
|
The
term which is applicable in respect Workmen’s Compensation or the
Employer’s Liability Insurance, is defined by the courts as commencing
at the end of the individual’s journey from his house and stops at the
commencement of his return journey, unless the employee is rendering
service to his employer or is discharging some obligation imposed upon
him by the contract of employment even outside his work place.
|
Inadvertent Error
|
Mistake
or fault committed unintentionally, accidentally. Property Insurance
Policies admit claims for loss/damage caused to the insured property by
an insured peril, resulting from such inadvertent errors of the insured
or others.
|
In-built XL Protections
|
Protection
of a quota share treaty by a common account XL protection which is
in-built. Reinsurers of quota share have to avail XL protection
compulsorily and pay the XL premium cost.
|
Inchmaree clause
|
Part
of the insurance coverage granted under the Institute Hull Clauses
which relates to loss or damage to the insured vessel caused by
negligence of master and/or crew and other additional perils such as
loss or damage to the hull and machinery caused by bursting of boilers,
breakage of shafts or any other latent defect.
|
Incidental Contract
|
Incidental
(and not the main) reason for forming a contract. This is relevant in
respect of Group Insurance Policies like Group Personal Accident
Insurance or Group Mediclaim Insurance where the group should exist for
some other homogenous functioning and should not have been formed only
for availing a group policy with an intention to get premium discounts.
Eg. Employees of a firm or company, members of a co-operative society or
association or club etc.
|
INCO Terms 2000
|
Internationally
accepted and employed terms for contracts of sale, first published by
the International Chamber of Commerce (ICC) in 1936. They were revised 7
times since then. The latest revision, known as “Incoterms 2000″, came
into force on January 1, 2000. It modifies some of the existing terms in
an updated format for ease of use and also for providing traders,
lawyers, transport officials and insurers with a modern text reflecting
the latest changes in the trading environment.
|
Income
|
Cash flow from all sources, normally expressed on an annual basis
|
Income Recognition
|
Normally
all the interest due in the accounting year on any investment is
reckoned as income of the year. However in respect of non-performing
assets RBI guidelines specifically prohibit recognition of interest on
these NPAs as income once, such interest is not paid on due dates.
Therefore interest on such NPAs will not be treated as income even
though the same may accrue within the Accounting year.
|
Incompetent
|
One
who is not legally capable of entering into a contract. Ex. Mentally
ill, minors etc. Contract of Insurance entered into with an incompetent
person is not legally valid.
|
Increase in Cost of Working
|
This
is the abnormal expenditure incurred by the insured to avert or
minimise the adverse effect on the business arising out of the property
damage and the consequent business interruption so that loss on the net
profit and the standing charges would get avoided or at least minimised.
Examples of such expenditure are rent for temporary premises, overtime
wages to hasten the process of repairs to the damaged item, hire of
machinery until affected one is set right etc.
|
Incurred Loss
|
Sum
total of the amount of all claims reported and paid during the policy
period and the estimated amount of all claims reported during the policy
period but remaining unpaid. For all practical purposes this is arrived
at by taking the claims paid during the policy year plus the loss
reserves as at the end of the policy year, minus the corresponding
reserves as at the beginning of the policy year. The difference between
the year end and beginning of the year loss reserves is called the
increase/decrease in reserve and may be added/subtracted directly
to/from the paid claims to produce the incurred loss.
|
Incurred Loss Ratio
|
The ratio that the incurred loss bears to the gross premium
|
Incurred-but-not-Reported (IBNR) Reserves
|
Liability
account on an insurer’s balance sheet reflecting claims that are
expected based upon statistical projections but which have not yet been
reported to the insurer
|
Indemnifiable Loss
|
Loss recoverable under the policy in view of its being caused by peril insured against
|
Indemnification of Loss
|
Compensation to the victim of a loss, in whole or in part, by payment, repair, or replacement.
|
Indemnitee
|
Recipient of an indemnity payment
|
Indemnitor
|
Provider of an indemnity payment
|
Indemnity
|
To compensate the sufferer of the loss to the extent of the loss suffered by him
|
Indemnity Period
|
A
term related to the consequential loss insurance covers. Indemnity
Period is the period during which the business of insured will be
affected either totally or even partially arising out of the damage to
the Business Property by an insured peril. This period will start either
from the time of the damage to the property or afterwards depending
upon exactly when the business results will get affected and continue
until such time when the business activities are wholly resumed and
reach normalcy. This period is different from the period of insurance
under the policy. While the commencement of the indemnity period will be
sometime during the period of insurance the termination of the same may
go beyond the date of expiry of the policy.
|
Independent Survey Report
|
A
report of inspection, of a property proposed for insurance or of a
property or an interest which is the subject of an insurance claim, by
an independent surveyor.
|
Indexing
|
Adjusting of values over time to reflect the impact of inflation
|
Inductive Reasoning
|
Type
of logic that makes the assumption that what has happened in the past
will happen in the future, given the same conditions surrounding the two
occurrences.
|
Industrial All Risks policy
|
A
comprehensive insurance cover introduced mainly for the benefit of
industrial houses. Cover is against all accidental loss or damage to all
fixed or moving assets like building, machinery, stocks etc. with named
exclusions. While consequential loss by fire and allied perils is
compulsory as a part of the package, Machinery loss of profit cover is
optional.
Minimum Sum Insured under the policy should be Rs.100 crores. This Policy is specially rated as per the guidelines of the tariff advisory committee |
Inevitable Accident
|
Accident , to which no fault can be attributed to anybody.
|
Infidelity Exclusion
|
In
relation Money (in Transit) Insurance, loss of money to the insured
caused by the act of fraud/dishonesty of its employee, is not payable
unless discovered within 48 hours of their occurrence. However insurers
would agree to delete this exclusion on payment of extra premium.
|
Infidelity of Employee
|
In
relation to fidelity guarantee insurance, or to that section of any
other policy which deals with fidelity guarantee coverage, refers to
financial losses to insured caused by an act of infidelity or dishonesty
on the part of a covered employee.
|
Inflation
|
Rise in the prices of goods and services as happens when demand increases over supply.
|
Inflation Factor
|
Adjustment in property insurance to reflect increased construction costs. See “Escalation Clause”
|
Inflation Rate
|
Rate of increase in prices of goods and services.
|
Information Technology Insurance Policy
|
Policy providing coverage to Information Technology companies or Organisation against their civil liability for any claim for
a) breach of duty orb) for brach of contract where the act, error or omission giving rise to the breach of contract also gives rise to breach of duty c) breach of confidentiality or d) defamation in respect of any information technology services or information technology products that are provided by the insured in the conduct of their business. Defence cost are also payable provided the defence of any claim against the insured is undertaken with the consent of the insurer.This is normally a claims made policy. |
Inherent Vice
|
A
term relevant in Marine Cargo Insurance. This is a quality inherent in a
cargo which produces damage to the cargo without the involvement or
impact of an outside agency. Inherent vice is not a risk but is only an
inevitability. Policies of marine insurance, even on all risks basis
exclude losses caused by inherent vice.
|
In-House
|
Performing
of some organisational functions within an organisation without having
the services of outside agencies who carryout and/or specialise in such
functions. In general insurance there exists the practice of in-house
loss surveyors Lawyers for part of the organisations’ function in the
respective areas.
|
Inland Transit Clause A
|
This
clause is attached to policies covering transportation of goods by road
or rail. This insurance covers the goods against all risks of physical
loss or damage. However, it does not cover all losses. The policy is
subject to exclusions like, inherent vice, wilful misconduct of the
insured, ordinary losses, delay and insufficiency of packing.
|
J
Jacket
|
Outer
Covering containing an Insurance Policy. Normally it furnishes brief
details of coverage, exclusions, conditions etc relating to the
insurance cover granted.
|
Jackup Rig
|
In
relation to energy risks, an offshore drilling structure with tubular
or derrick legs that support the deck and hull. When positioned over the
drilling site, the bottoms of the legs rest on the seafloor. A jackup
rig is towed or propelled to a location with its legs up. Once the legs
firmly positioned on the bottom, the deck and hull height are adjusted
and leveled.
|
Jettison
|
Throwing
overboard of a cargo. A step resorted to by the captain of the vessel
to save the vessel and/or other interests in the vessel in time of
common peril. Claim for loss of cargo so jettisoned is recoverable under
the marine insurance policy subject to any of the Institute Cargo
Clauses as long as the common peril is an insured peril.
|
Jan Arogya Bima policy
|
Policy
specially designed to provide cheap medical insurance coverage to
poorer sections of the society. The coverage is broadly along the lines
of the mediclaim policy for individuals. Individuals and their family
members can be covered. Age limit is 5 to 70 years. Children between the
age of 3 months and 5 years can be covered provided one or both parents
are covered concurrently.
Sum Insured per person is Rs.5000. |
Janata Personal Accident Insurance (Group)
|
Policy
exactly similar to the Janata Personal Accident Insurance Policy for
Individuals issued for a group of persons in the same manner as in the
case of a group personal accident insurance policy
|
Janatha Personal Accident Insurance (J.P.A)
|
An
accident insurance cover specifically for the rural people and the
common man. Covers death AND permanent total disablement due to
accidents Minimum and Maximum Capital Sum Insured is Rs.25000 and Rs.1
lakh respectively. Long term cover up to 3 – 5 years also are provided
with a discount on the cumulative premium.
|
Jewellers Block Policy
|
An insurance package for the needs of the jewellers. The policy covers
against
fire and allied perils, burglary and theft. The policy can be further
extended to cater to any other specific needs of the jewellers.
|
Joint Account XL Covers
|
Also
called Common Account XL Covers which are arranged to protect both
retained quota and reinsured quota on each and every risk. This
arrangement is also called “Reinsurance for Joint Account (RFJA)
|
Joint and Several Liability
|
A
legal term used in the definitions of liability , meaning that a decree
in a court of law, if made joint and several, may be enforced against
all the parties sued against or against any one of them separately.
|
Joint Cargo Committee
|
A
committee formed by the Lloyds and Company Underwriters to deliberate
on issues concerning cargo insurance and to make recommendations for
uniform implementation.
|
Joint cargo Survey
|
A
joint survey attended by the surveyor of the carrier and the surveyor
appointed by the cargo owner/cargo underwriter in case of a loss to
cargo.
|
Joint Hull committee
|
A
committee formed by the Lloyds and Company underwriters to deliberate
on issues concerning Marine Hull Insurance and to make recommendations
on premium rates policy terms and conditions for uniform implementation.
|
Joint Hull Survey
|
A
joint survey conducted by the surveyor appointed by the insured and the
surveyor appointed by the insurer in case of an accident to the insured
vessel resulting in a claim under the policy. Surveyor from the
classification society may also participate in the survey in case the
class of the vessel is to be certified after repairs to the vessel.
|
Joint Hull Understandings
|
Understandings
reached among the Hull Underwriters in the London Market with a view
ensure uniformity of approach on principles and practices concerning
Hull Insurance
|
Journal Entry and Journal Book
|
Every
accounting is made by a double entry i.e. debiting one account and
crediting another account. For some of the major items, a separate book
is maintained to record the transactions like cash book, purchases book,
sales book etc. In the case of an insurance company the same could be
premium registers, claim registers, commission register etc. All these
books will serve the purpose of a journal entry for debiting or
crediting the account head for the total of the transactions. Apart from
these books, there could be other transactions which are accounted by
passing journal entries for each transaction. Such journal entries are
entered in Journal Book.
|
Judgement
|
Determination of a court of competent jurisdiction upon matters submitted to it
|
Judgement by Default
|
Judgement delivered in a court in the absence of one of the parties to the litigation, either plaintiff or defendant.
|
Judgment Rating
|
Rate-making
method for which each exposure is individually evaluated and the rate
is determined largely by the underwriter’s judgment.
|
Just Compensation
|
Full Indemnity by the insurer for the loss sustained by the insured.
|
K
Kenney Ratio
|
Proposal
by Roger Kenney, an insurance journalist, that in order to maintain the
solvency of a property and casualty insurance company, insurance
premiums written should not exceed more than twice the company’s surplus
and capital. This historical measure is used by regulators to determine
the company’s claim paying capacity while maintaining its solvency.
|
Kick
|
The
term, used In energy risks, refers to entry of water, gas, oil, or
other formation fluid into the well bore. It occurs because the pressure
exerted by the column of drilling fluid is not great enough to overcome
the pressure exerted by the fluids in the formation drilled. If prompt
action is not taken to control the kick or kill the well a blowout will
occur.
|
Kidnap-Ransom Insurance
|
Insurance
coverage providing for payment within the limit specified in the policy
of ransom demanded by kidnappers of the insured.
|
Key Person Health Insurance
|
An
individual or group insurance policy designed to protect a firm against
the loss of income resulting from disability of a key employee.
|
Kill
|
The term, used in energy risks, refers to the following:
1. In drilling, to prevent a threatened blowout by taking suitable
preventive measures (e.g. to shut in the well with the blowout
preventers, circulate the kick out, and increase the weight of the
drilling mud)2. In production, to stop a well from producing oil and gas so that reconditioning of the well can proceed. |
Kindred Perils
|
Perils of the same kind. Ex.Burglary &Robbery- Storm & Hurricane.
|
Knock-For-Knock Agreement
|
In
relation to Motor Insurance, agreement between two or more insurers to
the effect that in the event of collision between two motor vehicles
insured with two of them separately, each insurer will bear the loss
with regard to the vehicle insured with them without going into the
cause of which vehicle has caused the collision. There is however no
effective implementation of this agreement by the insurers because of
various reasons.
|
Knot
|
A ship’s unit of speed – a nautical mile (i.e. generally 6080 feet – 1.151 statue miles or 1853 metres) per hour.
|
Known Loss
|
A loss about which the insured and/or the insurer is aware at the time when insurance is effected
|
L
Listed Companies
|
Companies
whose shares are listed for trading in Stock Exchanges. The respective
Stock Exchange in which the shares are listed prescribes Regulations for
these Companies regarding publication of their accounts and disclosure
of various information and details. Hence the listed Companies may be
said to be more transparent.
|
Losses discovered or claims made basis
|
The
term, In relation to excess of loss reinsurance treaties, means that
all losses discovered, reported or made during the period of the treaty
irrespective of the inception date of the original policy or policies or
of their occurrence. This type of cover is sometimes used when it is
difficult to pinpoint an exact date of occurrence, e.g. Fidelity
Guarantee Policies
|
Losses occurring basis
|
In
relation to excess of loss reinsurance treaties, the cover provided
under the arrangement being on losses occurring basis, meaning that all
losses occurring during the period of the treaty irrespective of the
inception date of the original policy or policies (issued by the
reinsured to the original insured) are covered by the treaty.
|
L.C.R.
|
“Largest
Claims Reinsurances” is a method more suitable to Liability
Reinsurances where a statistical survey of large losses is taken on last
five years and a prescribed limit of largest loss is fixed so that
reinsures are made liable to pay only those losses which cross that
limit.
|
L.P.G. Gas Dealers Insurance
|
A
comprehensive insurance package for the benefit of the L.P.G. gas
dealers providing cover for the insured, office and service persons,
building and fixtures, contents including gas cylinders, furnitures etc.
against accidental personal injury and property damage , insured’s
liability to his employees under workmen’s compensation act and also his
liability to third parties and insured’s financial loss arising out of
any act of infidelity on the part of his employees.
|
Label Clause
|
A
clause significant to Marine Cargo Insurance. In respect of canned or
similar type of goods which are labeled for product identification
purposes, where such labels will be damaged by contact with water or
other cargo, insurers liability will be restricted to the cost of
re-packing and re-labeling only as per this clause.
|
Lag
|
The period that has elapsed between when claims actually occurred and when actually paid
|
Landed but Missing
|
Situation
where an import or export cargo would be lost after landing at the
destination port, because of theft, over issue or wrong carriage to some
other place. In all such cases Port Trust Authorities would, after a
search, issue a certificate known as Landed But Missing Certificate or C
certificate.
|
Landing Remarks
|
Remarks
made by the dock authorities in their record, showing marks & nos.,
weights, condition etc. of the goods landed. Insurers would require an
extract of this record in respect of a claim for loss or damage to the
insured cargo as an evidence for the stage at which the loss to cargo
could have taken place.
|
Lapsed Policy
|
An
insurance cover which has come to a close earlier to the original date
of expiry as stated in the policy, because of non-payment of premium by
the insured. As regards non-life insurance this would arise only in
respect of Marine Hull policies or other policies issued for periods
greater than one year where the facility of installment premium payment
is extended. When the insured fails to pay the installment on or before
the due date, the policy will lapse on the due date.
|
Large Losses Information
|
nformation
on large losses is provided to reinsures for the purpose of reviewing
the performance of a treaty, be it proportional treaty or excess of
loss.
In relation to a proportional treaty, a loss is called a “large loss” when it exceeds the “Cash Loss Limit” provided in the treaty wordings. In relation to an excess of loss reinsurance, a loss is called a “large loss” when it exceeds 50% of the underlying limit |
Latent Defect
|
Term
used to refer to any hidden flaw or defect in the structure of the ship
or machinery which is not readily discoverable by a competent person
using reasonable skill in an ordinary inspection. Any loss/damage caused
by a latent defect is recoverable under a Marine Hull Insurance Policy
which provides coverage as per I.T.C. (HULLS) or I.V.C. (HULLS)
|
Law of Large Numbers
|
Concept
that the greater the number of exposures, the more closely will be, the
actual results to the expected results and greater the credibility of
predictions. This law forms the basis for arriving at the statistical
expectation of loss based on which the insurance premium will be fixed
for different risks.
|
Lawful Adventure
|
An implied warranty in respect of marine insurance contracts to the effect that the adventure must be legal.
|
Lay up Warranty
|
The
hull policies covering minor vessels such as fishing vessels and
sailing vessels carry a “Lay-up Warranty” providing that the insured
vessel be laid up out of commission during a specified period viz.
monsoon or winter months. The vessels may be laid up afloat, or on mud
or the “hard”.
|
Layout Plan
|
A
representation of the shape of horizontal section of a building. The
shape of the building at the ground floor is always taken and by adding
further details, the plan is built-up so as to incorporate all featuraes
of all storeys and also of the roof. Plans contain clear and concise
form of important matters which can not be covered by an inspection
report.
|
Lay-Up Returns
|
-
In Marine Hull Insurance, Scale of Premium Refund agreed by the
International Marine Insurance Market when the insured vessel should be
laid up during the period of insurance. As the risk to the insurer
during lay-up period would be very less when compared to the risk during
navigation of the vessel, return of premium is allowed by the insurer
for the laid-up period. This return of premium is subject to certain
conditions imposed by the insurer.
Motor Insurance, If vehicle is laid up in the garage, risks covered
under a Motor Comprehensive Insurance Policy are restricted to fire,
burglary and theft. |
Lead Insurer
|
The
insurer among the coinsurers in respect of any risk jointly insured by
them, who has greater share than others. Leader or the lead insurer will
deal with the insured on all matters connected with the insurance
coverage including full premium collection, document issue, other
clients’ servicing matters including settlement of claim for the full
assessed loss etc. It is customary for all coinsurers to issue to the
leader letter of authority to facilitate the leader to carry out all the
above functions on their behalf which would be binding on them.
Normally Ex-gratia settlement of claims do not come under this
arrangement. Periodical settlements will be effected as between the
leader and the coinsurers in connection with release of coinsurer’s
share of premium and collection of their share of losses.
|
Leader/Leading ReiInsurer
|
Generally
an Excess of Loss Reinsurance Treaty Terms are negotiated with a leader
who quotes rates and other terms and supports with a lead share. A
reputable leader’s lead makes it easy to complete placement with good
securities. Generally other reinsurers agree to follow the leader.
On a proportional treaty generally there is no leader but there may be a leading reinsurer with a large share. |
Leakage from Automatic Sprinkler Installations
|
Accidental
discharge or leakage of water from an automatic sprinkler installation
arising out of damage to the sprinkler head by impact from some object
or heat from some source other than fire causing sprinkler head to
operate. Loss/damage to an insured property due to such leakage of water
is covered under the standard fire and special perils policy.
|
Lease
|
Contract
whereby the owner of some fixed assets like building, equipment,
furniture etc. allows the usage by the contracting party of such fixed
assets for a specified period of time in consideration of certain
payment of amount in the form of rent by the said contracting party. The
owner of the leased property is called the Lessor and the user the
Lessee.
|
Legal Liability
|
Financial Liability towards third parties imposed under Civil Law.
|
Legal Liability Insurance Policy
|
Insurance
Coverage to provide indemnity to the insured in respect of financial
consequences of legal liability. Wherever liability arises under Civil
Law, compensation (damages) becomes payable. Besides there may be legal
costs awarded against the insured and also legal costs of defence of the
claim incurred which are also reimbursed under the policy.
|
Legal Opinion
|
Opinion given by a lawyer in respect of an issue, describing what is legal or lawful.
|
Legality of the contract
|
One
of the essential elements for a contract to be legally valid.
Applicable to insurance contracts also. The subject matter of the
contract must be legal.
|
Lender
|
Individual
or firm that extends money to a borrower with an undertaking by the
latter that such money shall be repaid, usually with interest. Lenders
extending loans against assets, whether moveable or immovable have an
insurable interest on such assets.
|
Lessee
|
A person to whom a lease is granted. A tenant under a lease
|
Letter of Credit
|
A
document authorising payment of an agreed sum to a named person at the
risk of the issuer. If expressed as irrecoverable the authority cannot
be withdrawn.
|
Letter of Indemnity
|
Where
original policy has been lost or misplaced by the claimant, a letter of
indemnity is obtained from him by the insurer to the effect that in
case, subsequently, some other person presents his claim on the insurer
on the support of the original policy, he will reimburse the claim
amount paid to him and also hold the insurer harmless for effecting
settlement with him without production of the original policy. This is
relevant only in respect a Marine Policy in view of its freely
assignable nature.
|
Letter of Transfer (G.A)
|
In
relation to General Average, refers to a letter obtained from the
insured by the insurer after paying on behalf of the insured the general
average deposit due to be paid by the insured in connection with a
general average. On the strength of this letter the insurer can receive
from the shipowner any excess amount of deposit over the actual
contribution amount.
|
Liability
|
Any legally enforceable obligation.
|
Liability Insurance
|
Insurance
designed to protect the policyholder against financial loss due to
liability resulting from injuries to other persons or damage to their
property.
|
Liability Limits
|
The
sum or sums stipulated in an insurance contract upto which an insurance
company is liable to meet the claims made by the insured.
|
Liability of carrier (Carriage by Sea)
|
Under
the contract of affreightment, the carrier is obliged to supply a
vessel which is both sea-worthy and cargo-worthy. Besides providing a
competent crew to man the ship, he must carry, care for and deliver the
goods at destination in the same good order and condition in which they
were delivered to him. If on account of failure on the part of the
carrier to discharge his duties, the cargo suffers any loss or damage,
he is liable to make good the loss to the cargo owner. The shipowner’s
liability towards cargo is limited by statute. The carriers’ liability
to cargo is insured through P & I Clubs and not in the ordinary
marine insurance market.
|
License
|
Legal
authority given to a company , agent , broker or a consultant to
transact insurance business within the framework of applicable laws
and/or acts and/or regulations that are in force.
|
License Fee
|
Sum
paid by an insurance company or other firms or individuals as fixed by
the Regulatory Authority for transacting business as per the authority
granted by the License.
|
Lien
|
A
legal right which one possesses over the property of another until the
latter has satisfied a liability towards the former. (Ex. A carrier has a
lien on the cargo carried by him until the freight for carriage has
been paid)
|
Life policy for 2 wheelers
|
Insurance
policy for two wheelers covering third party risks and remaining in
force so long as vehicle is validly registered. This will provide
continuous cover for third party liability to small vehicle owners.
|
Lift (Third Party Liability) Insurance
|
An
Insurance Policy designed for owners of passenger lifts in buildings to
take of their liabilities arising out of the use and operation of the
lifts. Policy provides indemnity for the legal liability of the insured
for payment of compensation to third parties for loss of life or bodily
injury or for the damage to the third party property.Legal expenses
incurred by the insured with the consent of the insurer for defending
any legal action against the former by such third parties will also be
payable under the policy. The policy will contain two limits one for any
one accident and another for all the claims during the period of the
policy which will represent the insurer’s maximum liability.
|
Light Motor Vehicle (LMV)
|
A
transport vehicle or omnibus, the gross vehicle weight (GVW) of either
of which or a motor car or a tractor or a toad roller, the unladen
weight of any of which does not exceed 7,500 Kgs.
|
Lightning
|
A
flash of light in the sky caused by the discharge of atmospheric
electricity from one cloud to another or between the cloud and the
earth. Lightning may cause crevices in a building or fire damages.
Lightning is a peril covered under the term “Fire” in relation to the
Standard Fire and Special Perils Policy.
|
Limit for Any One Loss
|
Refers
to amount of maximum liability of the insurer under the policy for any
one loss or series of losses arising out of one event
|
Limit of Liability
|
This
is the monetary limit to which the insurer/ reinsurer is liable for any
one risk. When It relates to reinsurance it is expressed either on a
sum insured basis or on P.M.L.(Probable Maximum Loss) basis.
|
Limit of Loss with Reinstatement Provision
|
In
an Excess of Loss Reinsurance Treaty there is limitation to aggregate
losses payable during the cover period by the Reinstatement Provision.
If such limit is exhausted before the expiry date of the cover the XL
Cover will become dead before the expiry date.
|
Limit per accident
|
Maximum liability of the insurer in respect of all claims arising out of a single accident.
|
Limit per bottom
|
This
represents the maximum limit upto which any single shipment will be
covered under the open cover by the insurer. ‘Limit per bottom’ clause
will appear in all open covers covering imports or exports.
|
M
Machinery Breakdown Insurance (Machinery Insurance)
|
Insurance
for plant and machinery, providing cover against all kinds of
accidental Electrical and Mechanical Breakdown due to internal and
external causes. Cover is in force during the time machine is in
operation or at rest or in process of dismantling and overhaul or during
subsequent re-erection at the same premises. The principal exclusions
are all those perils which are covered under a Standard Fire and Special
Perils Policy as also willful negligence, war, gradual deterioration
etc.. The rates, terms and conditions of this cover are governed by
tariff.
|
Made Good Amounts
|
The
term that is associated with General Average refers to the value of the
property, which has been sacrificed as a part of the general average
measures that is paid to the owner of the cargo from out of the general
average contribution made by all those whose property or other
interests, which have been saved.
|
Mailing List
|
Compilation of possible customers prepared as a list for use in direct-mail solicitation.
|
Maintenance Warranty
|
A
warranty incorporated in the E.D.P. Equipment Insurance Policy,
warranting the existence of a service or maintenance contract with the
computer makers.
|
Major Port Trust Act, 1963, – Limitation
|
As
per Section 120, no suit or other proceeding shall be commenced against
a Board until the expiration of one month after notice has been given
or after six months after the accrual of the cause of action.
|
Malicious Damage
|
Deliberate
damage to or deliberate destruction of the insured property or any part
of it by the wrongful act of any person or persons. Cover against
malicious damage is provided under the Standard Fire and Special Perils
Policy as a part of the Riot , Strike, malicious and terrorist damage
cover. This cover is also provided under marine cargo insurance and
inland transit insurance.
|
Malpractice
|
Improper
conduct of a professional in the performance of his duties, done either
intentionally or through carelessness or ignorance. Negligent or
unskillful performance of duties where professional skills are
obligatory.
|
Malpractice Insurance
|
Coverage
for a professional, such as a medical practitioner or lawyer, against
liability claims resulting from alleged malpractice in the performance
of professional services. (See also “Professional Indemnity Insurance”)
|
Managed Care
|
Health
care systems that integrate the financing and delivery of appropriate
health care services to covered individuals by arrangements with
selected providers to furnish a comprehensive set of health care
services.
|
Manifest
|
Statement
prepared by the master of a ship, of all the cargo carried in the ship.
This document is depended upon for comparison in case of short -landing
of any cargo either totally or partially from the vessel or the details
of all the cargo in case the vessel is totally destroyed by any of the
maritime peril. A copy of the manifest is kept on board the vessel for
cargo identification in case of any necessity.
|
Manufacturers Stocks
|
Consist of Raw materials, Stock-in-process and Finished goods
|
Manuscript Insurance
|
Cover designed to suit the particular needs of an insured, when a standard policy can not serve the purpose.
|
Marginal Well
|
In
energy risks, vessel that is approaching depletion of its natural
resource to the extent that any profit from continued production is
doubtful
|
Marine 50/50 Clause
|
A
special clause attached to the project insurance policies (Erection All
Risks), where the marine portion of the cover is not insured with the
same insurer. The clause provides that the insured should undertake to
inspect all packages containing project materials as they arrive at the
site for possible damages sustained by the materials during transit as
they may have to be excluded from the project insurer’s liability.
The clause further provides that in the event such an inspection is not possible immediately on arrival and damages are discovered only at a later date when the items are taken up for erection, the liability for such damages will be shared at 50/50 as between the insurer for marine cargo and insurer who has issued the erection all risks policy in question. |
Marine Adventure
|
A voyage or period of time during which cargo is exposed to maritime perils
|
Marine Cargo Insurance Policy
|
Insurance
in respect of goods and/or merchandise in transit from one place to
another by sea, air, rail, road or registered post under the relevant
contract of carriage.
|
Marine Clause
|
A clause which appears as one of the general conditions in the Standard Fire and Special Perils Policy.
By this clause the insurer is not liable for any loss or damage to the insured property if the said property is at the time of the accident resulting into the loss is also insured under a marine policy inclusive of the peril which has caused the loss, except for the excess over the loss recoverable under the marine policy. |
Marine Hull Insurance
|
Insurance
of Ocean-going steamers and other vessels. Hull insurance provides the
cover to the hull and machinery of a vessel as to the materials and
outfit and stores and provisions for the officers and crew. Policy also
covers liabilities.
Policies are also issued to cover loss of freight to the shipowner and disbursements i.e. amounts spent by the shipowner in fitting out the vessel including provisions and stores. Further policies are also issued to cover vessels in course of construction |
Marine Insurance
|
Broadly concerned with the insurance of
- goods in transit from one place to another by sea, air, rail , road and inland waterways- ships, covering loss or damage to the hull and machinery of a vessel and ship owner’s various interests and liabilities and - freight at the risk of the carrier. |
Marine Insurance Act, 1906
|
This
Act which came into effect in UK on 1st January, 1907, codified the law
relating to marine insurance and is now the basis of the marine
insurance principles today.
|
Marine Insurance Certificate
|
Whenever
an Open Cover is issued to provide automatic and continuous insurance
protection to a regular exporter/importer engaged in international
trade, insured is expected to declare details of each and every shipment
coming within the jurisdiction of the open cover as and when the
shipment would take place and the particulars are available. As the open
cover is only an agreement between the insurer and the insured and not a
stamped document, insurer will issue a specific stamped certificate
against each declaration after collection of appropriate premium on such
individual declaration. Sometimes in the place of the Certificate
insurers issue stamped policy for the individual declaration. This
stamped certificate of insurance or the policy will be used for all
legal purposes.
|
Maritime Conventions Act, 1911
|
The
act which provides that in the event of collision between two vessel,
the degree of blame of the respective vessels in relation to the
collision should be fixed in order that the liability of one ship to the
other can be correctly assessed. This act does not govern loss of life
or personal injury liabilities.
|
Maritime Fraud
|
Maritime
Fraud occurs when one,or more of the various parties , involved in
transactions connected with maritime adventures, acting in
collusion,succeed, unjustly and illegally, in obtaining money or goods
from another connected in the carriage, trade and financial obligations.
They are mainly in the form of
(a) Scuttling of ships(b) Documentary frauds (c) Cargo thefts (d) Frauds in connection with charters. |
Market Penetration in General Insurance
|
(i)
Marketing Strategy adopted by the insurer to increase the sales of
selected insurance products within an existing market through vigorous
marketing techniques.
(ii) Extent to which a particular product or certain identified products are purchased in a particular market. |
Market Retention
|
The extent of capacity available within the local market to accept a risk
|
Market Share
|
Percentage
share of a company out of the total sales by the entire industry, in
respect of all the products marketed, in all the areas of operation, or a
specific product, a specific area of operation and so on.
|
Market Value
|
Value
at which similar property could be normally purchased or sold in the
local market. For insurance purposes market value is arrived at after
deduction of appropriate value for depreciation of the property based on
age, usage, wear and tear and maintenance, from current value
|
Marketing
|
The
process of optimising the use of the resources of an enterprise by
seeking to identify and satisfy the needs of consumers, actual or
potential, in the best way for the enterprise.
|
Marketing and Distribution Risks
|
Failure
of a firm/company to sell all its produces at not less than the planned
price owing to competitors undercutting the price or introducing better
products, change in the fashions and the tastes of the customers,
general economic conditions or political moves etc.
|
Mass Communication
|
Use of widely circulating media, such as newspapers, magazines, television, and radio to inform the general public.
|
Master Policy
|
A
policy that is issued to an employer or trustee or an association or a
society establishing a group insurance plan for designated members of an
eligible group.
|
Material Damage
|
Physical
damage to any tangible property like building, machinery, stocks,
furniture, household goods, automobiles etc. which results in reduction
in the intrinsic value of such property.
|
Material Damage Proviso
|
Every CL (Fire) Policy must contain a proviso that
a) There shall be in force an insurance covering the insureds interest in the property at the premises against such damage; andb) Payment shall have been made or liability admitted under such insurance However, this proviso shall not apply to property on which the insured have no direct insurable interest. |
Material Fact
|
A
fact which would influence the judgement of a prudent insurer in
deciding whether to accept the risk and if so, at what rate of premium,
terms, conditions etc.
|
Material Mis-representation
|
Misrepresentation
of certain facts which will influence the insurer’s judgement as
regards insurance of a risk and fixing of rates, terms, conditions etc.
|
Material Representation
|
A representation to the insurer which would affect him in accepting the risk or in rating the premium.
|
Mate’s Receipt
|
When
the goods for export are directly handed over to the captain of the
ship, or his assistant called the Mate, he issues a receipt called the
Mate’s Receipt. This receipt is subsequently exchanged by a Bill of
Lading issued on behalf of the Shipping Company.
|
Maxicab
|
A
motor vehicle constructed or adapted to carry more than six passengers,
but not more than twelve passengers, excluding the driver, for hire or
reward.
|
N
Named Insured
|
Individual, firm, industry or an organization, in whose favor and specific name the policy is issued.
|
Named Perils policy
|
Policy
in which the perils against which the coverage is granted is listed.
Insurer will be liable for losses only when they are caused by any of
the listed perils.
|
National Wealth
|
Sum total of the value of all the capital and goods held within a nation.
|
Nationalization
|
Takeover
of a private company’s assets or operations by a government. The
company may or may not be compensated for the loss of assets.
|
Nationality of Vessel
|
Nationality
of the vessel is important to the insurer particularly if the vessel
sails under a “Flag of Convenience”, as he would not like extend cover
for cargo shipped by such vessels and insert a warranty to that in the
policy or the open cover. (See “flag of Convenience”)
|
Natural Gas
|
Primarily
Methane and also some Ethane with small quantities of entrained heavier
fractions, such as Propane, Butane, etc. These and others, are readily
condensed from the Natural Gas flow and are known as Natural Gas
Liquids, as distinct from Liquid Natural Gas (L.N.G.), which is
Methane/Ethane refrigerated under pressure to the liquid state.
|
Natural Losses
|
Loss or damage caused by vagaries of nature, such as storm, hurricane, floods, lightning, earthquake etc.
|
Natural Resources
|
Actual and potential forms of wealth supplied by nature, such as coal, oil, wood, water power and arable land.
|
Navigational Limits
|
Limits
prescribed by the Port Authorities and the Director General of Shipping
with regard to the area of operation of the ships, which depend upon
the size, nature and type of the vessels. Insurance Policies also fix
territorial limits for operation of the vessel depending upon its use
|
Negligence
|
Failure to use the care that a reasonable and prudent person would have used under the same or similar circumstances.
|
Negotiable Instrument
|
A document of title to property that may be transferred from one person to another in the course of business
|
Negotiated Settlement
|
Settlement
of Claim reached on a compromise basis in cases where there is dispute
as regards liability or the quantum of loss payable but that it is felt
that a compromised disposal is desirable on mutual interest.
|
Neon Sign Insurance
|
Insurance Coverage in respect of loss or damage to the neon sign installation by
(a) accidental external means and (b) fire, lightning, external explosion and theft. Insured’s liability to third parties arising out of an accidental damage to the insured neon sign can also be covered under the policy. |
Net Loss
|
Residual
Loss to the insured after taking into account realisation from salvage
and/or recoveries from third parties if any, but that such salvage
and/or third party recoveries shall be taken net of any expenses
incurred towards realisation of such recoveries.
|
Net Premium
|
The
portion of the premium which is designed to cover losses/ benefits
payable under the policy, but not the various expenses.The portion of
the premium retained by the office after deduction of expenses of
management inclusive of the agent’s commission.
|
Net Premium Written
|
Total premium written by a ceding company minus premium ceded to the reinsurer.
|
Net profit
|
The
Net Trading Profit excluding capital receipts and accretions and outlay
chargeable to capital. It is arrived at after making provisions for all
standing charges but prior to deduction of tax. The Loss of Profit
Policy provides cover for the loss of Net Profit and the insured
standing charges during the period of interruption to production arising
out of a damage in the insured premises by an insured peril.
|
Net Retained Line Clause
|
A
clause which is applicable to the excess of loss reinsurance cover,
which refers to the protection offered by the cover only to the retained
net line account of the reinsured. The net account of the reinsured may
include the following:
a) Normal Any One Risk Retention as per the reinsurance programmeb) Unplaced share of the proportional treaty after retention. As per the net retained line clause the excess of loss cover will exclude the second item. |
Net Retained Lines
|
The
term, in relation to excess of loss reinsurance treaties refers to the
provision that the treaty will only protect that portion of the
insurance which the reinsured retains to his net account. The treaty
will not protect him if one of the proportional reinsurer under a
proportional treaty does not settle his share of loss under the treaty
and as a result it reflects back as a liability to be borne by the
reinsured.
|
Net Retention
|
Extent
of capacity which an insurance company puts forth to retain the risk to
its own account without any recourse to reinsurance.
|
Net tonnage
|
Passenger and/or cargo accommodation expressed in a cubic measurement based on 100 cubic feet equals one net registered ton.
|
Net Worth Of The Company.
|
This
indicates the excess of Assets over the Liabilities of the Company,
which in turn mean, the Sum of the Equity and Preference Capital and
Free Reserves like General Reserve of the Company.
|
New Attachments
|
The
term refers to the acquisition of new vessels to the existing fleet of
vessels of a shipowner. The premium rating of such new vessels will
depend on the experience of the fleet in addition to the factors such as
type, gross registered tonnage,age, sum insured, trading limits of the
individual vessel etc. Premium rates for the vessels depend upon the
trading limits opted for by the ship owners, such as worldwide, limited
trading, port limits, etc.
|
New Business Clause
|
A
special clause added to the specification in a loss of profit
(Consequential Loss) policy. When insurance is arranged for an entirely
new business where no past performance figures exist. This clause amends
the definitions of rate of gross profit, annual turnover and standard
turnover to expand the results from the commencement of the business to
the date of damage to give proportionate figures for a complete twelve
months. (See ‘Gross Profit’, ‘Annual Turnover’, ‘Standard Turnover’ and
‘Specification’)
|
No Cession without Retention
|
It
is a condition in reinsurance contracts that the ceding company has to
retain a portion of the risk and reinsure only the balance. Contract
does not permit reinsurance for 100% of the risk.
This condition is mainly to safeguard reinsurers’ interest to ensure that bad risks are not passed on to them fully. |
No Claim Bonus
|
A
reduction as a percentage in the manual or the prospectus premium at
the time of renewal of the policy based on favourable claims experience
in the previous year/s policy/ies for the same insured property against
the same insured perils.
|
No Claim Refund
|
Portion
of premium agreed under the policy to be refunded to the insured in the
event of no claim being reported or paid during the entire policy
period. It is customary for the insurance companies to link this with
the renewal of the policy, to ensure renewal with them without fail.
|
No Cure, No Pay
|
1.
A term used in connection with salvage operations of a vessel or cargo
in distress. Salvage Award payable to the salvor will be on ‘No cure No
pay’ basis in the sense he is entitled for the award only if and when
the property is saved.
2. Recovery Agents pursuing recovery from the carriers, will handle
the assignment given to them by the insurers on ‘No cure No pay’ basis
in the sense that they will claim fee only when they recover some amount
from the carriers. |
No fault liability
|
Means
that the claimant is not required to prove that the death, injury or
damage was due to any wrongful act, neglect or default of any person.
The relief provided under the following acts come under “No Fault
Liability”
1. Public Liability Insurance Act.2. Motor Vehicle Act in connection with Road Accident Victims. 3. Workmens compensation act |
No Known or Reported Loss
|
This
condition is sometimes stipulated by insurers/reinsurers who base their
acceptance of a proposal for insurance/reinsurance subject to no known
or reported loss to subject matter proposed for insurance/reinsurance as
on the date of their acceptance.
|
Nominee
|
Person,
firm or institution whose name is mentioned in the accident insurance
policies to be the recipient of the policy benefits in the event of
death of the insured person arising out of an accident
|
Non – Performing Assets
|
This
refers to the Investments which are classified as Non-performing Assets
(NPA) as per the accounting policy of the Company. RBI gives detailed
guidelines as to how and when an investment has to be treated as NPA
which is with reference to the non-payment of the Loan or Debenture when
it is due or non-payment of the interest on the Loan or Debenture when
due. The amount to be provided for in these cases is mentioned in the
RBI guidelines and they are applicable to Banks and Financial
Institutions. Insurance Companies may choose to follow these guidelines
and provide for the same in the books of accounts.
|
Non Destructive Testing
|
Testing a component without actually destroying it or damaging it.
|
Non Fare paying passengers
|
Provision
in Motor Insurance Commercial Vehicles Policy to cover, in respect of
commercial vehicles which are not authorised to carry fare paying
passengers, persons connected with the specific journey allowed to
travel on payment of additional premium
|
Non Hazardous
|
Refers
to the physical/chemical properties of a matter of whatever state which
present no undue exposure to the risk in question. Normally the premium
rates will be the lowest for non-hazardous goods.
|
Nonassignable Policy
|
Policy which can not be assigned by the insured to another. Normally property and liability policies are not assignable.
|
Non-Concurrent Policies
|
Two
or more polcies which cover part only of the properties covered by
other policies or which include properties not covered by others.
However some property will be common to all.
|
O
Obsolescence
|
Process
by which property becomes useless, not because of physical
deterioration, but because of changes outside the property, notably
scientific or technological advances.
|
Occupancy and Fire Rates
|
The
direct relationship between the use to which the premises is put to use
and the likelihood of its exposure to fire. Occupancy of a building is
one of the main factors for fixation of premium rate for fire cover.
|
Occupational Disease
|
Disease
contracted arising out of employment related exposures and conditions.
Workmen’s Compensation Insurance Policy provides cover against
occupational diseases.
|
Occupational Hazards
|
Occupations
which expose the insured to greater than normal physical danger by the
very nature of the work in which the insured is engaged, and the varying
periods of absence from the occupation, due to the disability, that can
be expected.
|
Occurrence
|
Event
that results in bodily injury and/or property damage to a third party.
As regards liability insurance policies all claims for bodily injury or
property damage in relation to different third parties that would have
arisen out of one event would be treated cumulatively for application of
insurer’s maximum liability in respect of any one occurrence.
|
Occurrence Basis Policy
|
A
Liability Insurance Policy that covers Claims arising out of events
that occurs during the policy period, regardless of when the claim is
filed.
|
Occurrence Limit
|
Maximum liability of the insurer in respect of all claims arising out of occurrence of one event.
|
Off Duty Covers
|
Personal
Accident insurance Cover issued to a person for the restricted hours
when he is not at work and/or not on official duty. Normally premium
charged for this policy will be 50% of the premium charged for a 24 hrs.
cover.
|
Offer
|
Manifestation of willingness to enter into an agreement.
|
Offer and Acceptance
|
One
of the essential elements for a contract to be legally valid.
Applicable for Insurance Contracts also. A contract is completed by one
partys acceptance of an offer made by the other party
|
Offeree
|
Person who receives an offer from another. The offeree may accept or reject the offer.
|
P
Policies issued basis
|
When
excess of loss reinsurance treaties are concluded on Policies issued
basis, the treaty will only cover those policies that have been issued
or renewed at dates falling within the period of the treaty.
|
P.P.I
|
Policy
Proof of Interest. Under an ordinary marine policy the assured has to
prove his insurable interest at the time of loss to substantiate a
claim. A PPI policy dispenses with the need for the assured to prove his
interest at the time of loss. The mere production of the policy is
deemed sufficient proof of interest. There are certain insurable
interests which, although they exist, are difficult to be established or
extent of which is difficult to arrive at. Increased Value of the cargo
is an example of the former and Anticipated Freight is an example for
the latter.
|
Package
|
In
general insurance, comprehensive insurance scheme, in favor of an
individual or an enterprise or an industry covering assets, personnel,
interests and liabilities against a bundle of perils.
|
P.A. Flight Coupons
|
Passenger’s
Flight Insurance Coupon covers death and/or permanent disability
arising out of a bodily injury caused by violent, accidental, external
and visible means whilst in or entering into or descending from any
aircraft owned and/or operated by a regular airline over a schedule
route by which the insured is travelling as a fare paying passenger
during the flights specified. Rate of premium is Rs.5/- per Rs.50,000/-
for a flight of not more than 24hrs duration.
|
Package Policy
|
A
combination of two or more individual coverage into a single policy. A
Householders Comprehensive Insurance Policy, for example, is a package
combining property, personnel and liability coverage for the
householder.
|
Packing List
|
Statement
furnishing details of the contents of a package or a container. This
document is required by the insurer in case of a claim for shortage of
contents in the package caused during transportation and preferred under
the relevant cargo insurance policy. Packing List helps for a
comparison of the contents packed with the contents received at
destination.
|
Paid Losses
|
Total amount of all the losses paid by an insurance company in a given period
|
Pain and Suffering
|
Refers
to the suffering attributable to the injury sustained by the person in
an accident and to any consequential surgical operation. This is one of
the heads of damages allowed in relation to any motor third party
insurance claim. Past and future suffering, pain, duration and its
severity are taken into account. Damages are given both for mental and
physical pain and suffering.
|
Pair & Set Clause
|
Where
the value of certain articles such as a pair of diamond earrings
depends on their continuance as a pair or set, the value is drastically
diminished if one of the pair or set is damaged or destroyed. Naturally,
the insured would prefer to abandon the remaining earring to the
underwriter and to claim a total loss. By inserting Pair & Set
Clause, the insurer limits his liability to the insured value of the
damaged part or lost object.
|
Palletising
|
Assembly of one or more packages on a pallet base and properly secured to it.
|
Pallets
|
This
is a special packing method where bundles, bales, cases etc. are placed
in wooden platforms and then securely tied. Pallets are then lfted by
fork-lifts or cranes and placed into the holds of the vessels.
|
Q
Qualified Nurse
|
In
relation to Medical Insurance, means a person who holds a certificate
of recognised Nursing Council and who is employed on recommendations of
the attending Medical Practitioner.
|
Quarantine Restrictions
|
As
per the Carriage of Goods by Sea Act, the carrier is not responsible
for any loss to cargo arising out of the vessel carrying a cargo that is
being subject to certain restrictions imposed by the health authorities
of the countries involved. However the cargo insurer will consider this
as a delay beyond the control of the insured and pay the claims for
loss or damage to cargo as long as it has been caused by an insured
peril.
|
Quarrels and Arbitration
|
In
relation to reinsurance, an Arbitration Clause is provided in treaty
wordings setting out the mechanism for settling any disputes, quarrels
etc. as between the parties to the reinsurance contract by Arbitration.
|
Quid Pro Quo
|
Exchange.
In relation to insurance the insurer selling a policy of insurance to
some one in consideration of the premium paid by the latter.
|
Quota Share Cum Surplus Treaty
|
A
method of proportional treaty arrangement combining the quota share
treaty and the surplus treaty. For example a risk may be ceded on quota
share basis of 50%, 50% being the reinsured retention and 50% ceded to
the quota share reinsurer. The 50% retained by the reinsured may be
further protected by a surplus treaty after fixing the line of retention
of the reinsured.
|
Quota Share Pools
|
Market
Pools are arranged on Quota Share basis where participating member
companies make quota share cessions and then share the entire business
according to their participation percentage.
|
Quota Share Treaty
|
This
is an agreement whereby the ceding company is bound to cede and the
reinsurer Is bound to accept a fixed percentage of every risk accepted
by the ceding company.
|
R
R.C.Book
|
Registration
Certificate of a vehicle confirming ownership of the vehicle. This
document indicates insurable interest on the part of the proposer of
insurance. This is verified by the surveyor/insurer in case of a road
accident claim pertaining to the insured vehicle.
|
R.I.V. Policy
|
Reinstatement
Value Policy – A standard fire and special perils policy with
reinstatement value clause attached where by Building, Plant and
machinery or other fixed assets are covered for their reinstatement or
replacement cost enabling the insured to be indemnified in the event of
loss for the cost of replacing or reinstating with property of same kind
or type when new as on the date of loss. The principle of indemnity is
slightly modified in the sense that the insured will be compensated for
‘new’ in the place of ‘old’.
|
Ratable proportion of Loss
|
The
term relates to treatment of a claim for a loss which is insured under
more than one policy. In such a situation settlement will be made each
insurer for only his share of the loss, which will be that proportion
that the sum insured under his policy will bear to the cumulative sum
insured under all the policies involved.
|
Ram
|
In energy risks, the closing and sealing component on a blowout preventer
|
Ram Blowout Preventor
|
In
energy risks, a blowout preventer that uses rams to seal off pressure
on a hole that is with or without pipe. It is also called a ram
preventer.
|
Rate Guide
|
Company
manual or prospectus furnishing premium rates for various insurance
covers as relating to person, property and peril. This will furnish
rates for all insurance policies other than those which are subject to
tariff rates. (See Tariff Rate). The manual is mainly intended for
agents who solicit business and will also contain guidelines for their
business procurement.
|
Rate of Exchange
|
Price of one currency in terms of another.
|
Rate of Gross Profit
|
Gross
Profit expressed as a percentage of the turnover. In relation to
Consequential Loss Policy, refers to the rate of gross profit earned on
the turnover during the financial year immediately before the date of
loss suitably adjusted to provide for trend of the business.
|
Rate of Premium
|
The pricing factor upon which the premium payable for a particular insurance cover will be based
|
Rate on GNPI
|
In
relation to excess of loss reinsurance, refers to the premium for the
excess of loss cover expressed as a percentage of the Gross Net Premium
Income. (See ” Gross net Premium Income”)
|
Rate on Line
|
In
relation to excess of loss reinsurance, refers to the premium for the
excess of loss cover expressed as a percentage of the limit of the
excess of loss cover for any one event of loss.
|
Rate per Mille
|
Rate of premium calculated per thousand of the Sum Insured
|
S
Sabotage
|
Destruction
of productive capabilities in a plant or factory by those opposed to a
company management. Sabotage is a malicious act and loss sustained by
the insured arising out of the destruction of the insured property by
sabotage is recoverable under the malicious act extension.
|
Safely landed
|
The
term relates to Marine Cargo Insurance. Goods are safely landed when
they have been landed in the customary manner within a reasonable time
after arrival at the destination.
|
Safety Audits
|
A
system that brings together the various techniques relating to both the
perception of risk and the identification of operative cause and
perils. It has been defined as ‘a critical examination of an industrial
operation in its entirety to identify potential hazards and levels of
risk’.
|
Said to contain
|
A
term which finds a place in the receipts given by all the carriers in
connection with the goods entrusted to them for carriage/transport from
one place to another, which are contained in cases or any closed
packages. It is then the responsibility of the consignor or the
consignee to establish to the satisfaction of the carrier about the
description and quantity of the goods in the packages, when any shortage
of contents, while in the custody of the carrier is alleged by the
consignee at the time of delivery.
|
Sale Contract
|
Contract of Sale means contract by which the seller and the buyer agree on the terms and conditions of sale.
|
Sale of Vessel clause
|
Provision
in the Institute Hull Clauses which provides that the policy is
automatically cancelled in the event of change of ownership of the
vessel or its management. Continuation of cover in such cases, if agreed
by the insurer will be done by the insurer by suitable endorsement on
the policy.
In case of cancellation, the insured will be entitled for pro rata daily net premium return. |
Salesmanship
|
Art of persuading people to purchase a product or to avail a service.
|
Salvage
|
1.Property which is partially saved from loss or damage.
2.A compensation for salvage services paid under contract. |
Salvage Association
|
An
Association incorporated in U.K. It is governed by a Committee drawn
from Lloyd’s and Company underwriters. Its main activities consist of
(i) Providing expert advice and supervision of salvage operations(ii) Undertaking damage and condition surveys of hull and cargo (iii) Supervision of repairs, towage and voyage approvals (iv) Site and lay-up surveys (v) Oil industry damage surveys (vi) Preparing the case for insurers when important litigation is in prospect The services of the Salvage Association are available to underwrites, shipowners and others on request from the interested parties. It has offices in many important ports and has a world-wide network of correspondents. |
Salvage Charges
|
In
relation to Marine Insurance, refers to the cost incurred by third
parties, independent of any contract, towards salvage operations in
saving a distressed vessel. Salvage Operations will include towage,
refloating, uprighting, or raising-up a sunken vessel. Salvage Charges
do not include the expenses of services in the nature of salvage
rendered by the insured or his agents, which would be treated as Sue and
Labour Charges or General Average, depending on the circumstances.
|
T
Tainting
|
State
of cargo being soiled by atmospheric conditions arising for example
from cargo in close proximity giving odors such as oranges tainting tea.
|
Tally Sheet
|
Document
prepared by the port trust officials recording the description of the
cargo and the number of packages as the cargo is landed from a vessel.
The document will also record wherever a package is landed not in
apparently sound condition. This is known as “landing tally” and
requisitioned by the insurer in case of an import claim under a marine
insurance policy to verify whether the package which contained the item
claimed for landed in a damaged condition thereby indicating that the
loss should have taken place in the custody of the carrier.
|
Tank Containers
|
Tank
containers usually of stainless steel and of size 8 x 8 x 10 and
capacity 4000 liters are used to carry dangerous, corrosive, inflammable
and toxic chemical substances. These tank containers carry the
advantages of easier handling, completely adaptable to integrated
transport systems, more effective for volume loading and less expensive
than using drums.
|
Tank Farm
|
An
area at a refinery, terminal or storage depot dedicated to storage
tanks and their safety requirements for surrounding space and spillage
containment devices
|
Tankers
|
Liquid Bulk Cargo Carriers, which are strongly built vessels to carry bulk liquid cargo like crude oil, petrol, molasses etc.
The speed of the vessel will be 10 to 15 knots. They ply on fixed routes. Collision damage will result in huge losses. Also the risk of fire and explosion during discharge of cargo is more. There are possibilities of pollution risk also. |
Tare
|
Weight of packing in a consignment or unlade weight in a vehicle or container.
|
Tariff Rate
|
Rate
fixed by the Tariff Advisory Committee in respect of specific property /
properties and against specific peril/perils, which will have to be
scrupulously followed by all insurers. In almost all cases the rate
fixed by the tariff committee is the minimum to be charged for a given
situation, leaving it to the individual insurer to charge more if a
specific proposal warrants.
|
Tax Token
|
Token
issued by RTO for having paid required tax for the vehicle. Strictly
speaking, payment or non-payment of tax does not vitiate insurance
contract and liability under the policy does not get prejudiced.
|
Taxying (Aircraft)
|
Deemed
to include all movement of the aircraft under its own power other than
for the purpose of flight. Taxying shall not be deemed to cease merely
by reason of the temporary halting of the aircraft in the course of
taxying from one point to another
|
Tearing apart on account of centrifugal forces
|
The
term refers to insured machine/equipment/apparatus splitting into
factions due to the force tending to pull it outward when it is rotating
rapidly around the centre. This contingency is not covered under the
explosion coverage part of a standard fire and special perils policy.
|
Television Insurance
|
Insurance
Cover for T.V. apparatus and antenna as also to VCR against Fire and
allied perils, Riot and Strike, any other accidental damage by external
means, mechanical and electrical breakdown, burglary, housebreaking and
theft. Cover is also provided against third party liability of the
insured or loss to his own surrounding property arising out accidents
caused by or through the insured item. Differential rates of premium are
applied by the insurer depending upon whether the equipment is for
personal or commercial use and also if let on hire.
|
U
Ultimate Net Loss
|
The
term used in excess of loss reinsurance for the total sum paid by the
ceding company in settlement of its liabilities, other expenses
excluding office expenses and salaries, less salvage/recoveries and all
other reinsurance recoveries.
|
Ultimate Net Loss Clause
|
A
Clause appearing in the excess of loss reinsurance wordings to the
effect that the total sum actually paid by the Reinsured in settlement
of losses including loss expenses, loss salvages and recoveries
including recoveries from treaties shall insure to the benefit of the
excess of loss cover.
|
Ultra Vires
|
Beyond power or authority
|
unfair or misleading advertisement
|
“will mean and include any advertisement:
(i) that fails to clearly identify the product as insurance;(ii) makes claims beyond the ability of the policy to deliver or beyond the reasonable expectation of performance; (iii) describes benefits that do not match the policy provisions; (iv) uses words or phrases in a way which hides or minimizes the costs of the hazard insured against or the risks inherent in the policy; (v) omits to disclose or discloses insufficiently, important exclusions, limitations and conditions of the contract; (vi) gives information in a misleading way; (vii) illustrates future benefits on assumptions which are not realistic nor realizable in the light of the insurer’s current performance; (viii) where the benefits are not guaranteed, does not explicitly say so as prominently as the benefits are stated or says so in a manner or form that it could remain unnoticed; (ix) implies a group or other relationship like sponsorship, affiliation or approval, that does not exist; (x) makes unfair or incomplete comparisons with products which are not comparable or disparages competitors. |
Umbrella XL
|
A
company may have excess of loss programme for different classes. At the
top of each such programme they may have arranged an Umbrella XL. This
Umbrella will be for all classes. It is with variable underlying for
each class equal to the range of top layer in individual class’s XL
programme. It works as top layer for each class and when more than one
class are involved underlying of each class applies separately with a
common/combined limit.
|
Unallocated Benefit
|
A
policy provision providing reimbursement up to a maximum amount for the
cost of all extra miscellaneous hospital services, but not specifying
how much will be paid for each type of service.
|
Underinsurance
|
Inadequate
insurance coverage in respect of the insured property. This results in
the claim admitted under the policy being proportionately reduced.
|
Underlying limit
|
A
term used in connection with Excess of Loss treaty. The limit upto
which the ceding company would bear the loss due to any one cause or
event before invoking the recovery from reinsurer.
|
Underwriter
|
An
insurer; an official in an insurance company whose main responsibility
is to perform the functions of underwriting to determine whether the
risk proposed for insurance is insurable and if so, at what rates, terms
and conditions.
|
Underwriting
|
Process
of examining proposal, arranging for inspection of risks, fixing of
premium rates, terms and conditions of cover, rejection of uninsurable
risks etc. with the main objective of ensuring spread of risks among a
large group of insureds in a manner that is equitable for the insuring
community and profitable for the insurer.
|
Underwriting Loss
|
Shortfall that results after payment of claims and expenses against the premium received.
|
V
Valid Contract
|
A contract which can be enforced in a court of law.
|
Valuation Clause
|
A
clause which appears in the Institute Time Clauses and other hull
clauses which provides that the insured value is to be taken as the
repaired value for constructive total loss purposes and nothing in
respect of break up value is to be taken into account.
|
Value
|
The worth of the property to be insured or of that which has been lost or damaged.
|
Valued policy
|
Contracts
of Insurance where the sum insured in respect of the insured property
is deemed to be the actual value of the property throughout the currency
of insurance. Claims in respect of total loss are settled without any
adjustment which may otherwise arise on such considerations as adequacy
of the sum insured, market value, etc.
Marine Insurance Policies both for Cargo and Hull are all “Valued Policies”. As regards policies like Fire and Burglary Policies this facility is extended in respect of valuables, paintings, pictures, curios, antiques and other works of art. |
Variable Expenses
|
Cost
or expenses which vary in proportion to the quantum of production or
the volume of turnover. Variable expenses are eliminated while computing
the gross profit of a business for the purpose of fixing the sum
insured under a business interruption or the consequential loss policy.
|
Variable Quota Share Treaty
|
In
a Quota Share Treaty there may be retention with maximum say 20%. This
would mean that on certain risks retention can be lower than this
percentage. This is termed as variable quota share. There will be
corresponding variation with regard to maximum reinsurance in respect
those risks.
|
Vehicles Laid Up
|
Refers
to a comprehensively insured motor vehicle being laid up in garage and
not in use. Subject to a notice from the insured in advance of the
period during which the vehicle will be laid up, insurer will restrict
the cover during the laid up period to Fire, Burglary and Theft Risks
only. The insured consequently will get either of the following benefits
1. A portion of the premium already collected by the insurer will be given to the credit of the insured at the time of renewal of the policy or 2. The existing policy will be extended by a period equivalent to the laid up period by charging an extra premium which will represent the premium for the restricted cover during the laid up period. |
Vehicles subject to Hypothecation Agreement
|
It
is not permissible to issue policies in the joint names of Pledge and
Registered Owner of the vehicle. Policies must be issued in the name of
Registered Owner of the vehicle and the Pledges interest protected by
the use appropriate Endorsement.
|
Vehicles subject to Lease Agreement
|
It
is not permissible to issue policies in the joint names of Lessee and
Lessor. Policies must be issued in the name of Lessee and the Lessors
interest protected by the use of appropriate Endorsement.
|
Veterinary Health Certificate
|
Certificate
issued by a qualified Veterinarian on the health and value of the
animal. This is obtained at the time of insurance so that healthy
animals are only insured and for their real value.
|
W
Wagering Contracts
|
A
contract of marine insurance where the insured has no insurable
interest in the subject matter insured nor has any expectation of
acquiring such interest anytime during the insurance is in force.
|
Waiting Period
|
A period mentioned as ‘waiting period’ in the policy during which any loss-taking place is not recoverable under the policy.
|
Waiver
|
Voluntary
relinquishment of known right. It may arise when a person knowing of a
right that has accrued to him, fails to take advantage of the right
within a reasonable time. In case of a breach of a condition or warranty
by the insured, the insurer does not take note of that and give notice
to that effect he is deemed to have waived his right.
|
Waiver of Subrogation
|
A
clause relevant to policies, issued in favour of two or more parties,
who have financial interest and/or involvement in the subject matter of
insurance, whereby the insurer consents to waive all rights of
subrogation or action which he may have or acquire against any of the
insured arising out of any occurrence in respect of which a claim is
admitted under the policy
|
Warehouse to Warehouse Cover
|
The
voyage through which the cargo is to be moved commences from the
sellers warehouse and terminates on arrival at buyers warehouse. Since
the cover for cargo encompasses this entire movement from the sellers
warehouse to the buyers warehouse, it is called as warehouse to
warehouse cover. This means that the scope of the cargo cover is
extended to take care of the interior transits at both ends of ocean
transit as well. (See also “Transit Clause”)
|
Warehouse-keepers
|
Individuals
or organizations who receive the goods for the purpose of storage in
their warehouses. They are supposed to exercise due care and diligence
in the storage of goods. They are entitled to payment for their
services. They have a lien on the goods for the charges payable to them
and consequently have an insurable interest in the goods.
|
Warranted underdeck
|
Incorporation
in the marine cargo insuraance policy, of a promise or undertaking
given by the insured to the effect that the insured cargo shall be
carried under deck only. Breach of this warranty will enable the insurer
to avoid the contract.
|
Warranty
|
An undertaking by the insured that:
(a) Something shall be done(b) Something shall not be done (c) A certain state of fact exists (d) A certain state of fact does not exist |
Warranty Surveyors
|
Surveyors
who carry out surveys in connection with towing of one vessel by
another, to suggest the method of towage, suitability of towing line
monitoring of weather conditions during the towage voyages and also the
precautions to be taken in case of any untoward incidence. The warranty
surveyor also approves the condition of the vessel to be towed and the
vessel being used for towing depending upon the voyage, distance and
capability.
|
Y
Year of Account basis
|
This
term relates to an accounting methodology practiced in connection with
reinsurance transactions. In this category are accounts that deal with
premiums and losses in the year under review irrespective of the year of
origin of the cession or of the loss.
|
Yield
|
This
refers to the ratio that income from an investment bears to the
cost/face value of the investment. In the case of a 14% Debenture of
face value of Rs.100/-, the income will be Rs.14 per annum on the
investment of Rs.100 and hence the yield is 14% if the debenture is
acquired at Rs.100. In case the same is acquired at a price of Rs.110,
the income in a year will be Rs.14 on an investment of Rs.110 and hence
the yield will be 14/110×100. This is called current yield of the
investment.
|
York-Antwerp Rules
|
The
set of rules, which has been devised as a voluntary code to maintain
universal uniformity on treatment of General Average. The provisions of
these rules form the basis for General Average adjustments. There is
specific incorporation in all the bills of Ladings agreeing for adoption
of these rules. Underwriters, world over approve these rules in
connection with consideration of General Average related claims under
their polices. These rules were first coded in 1890 and have undergone
few amendments over the period to take care of developments that have
taken place in the implementation of these rules.
|
No comments:
Post a Comment