General Insurance

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.

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 don’t 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 un-commenced month of the policy when the policy is cancelled before the normal expiry date by mutual agreement between the insured and the insurer.

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 up to 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

• Providing the specific insurance covers for the group

• Achieving reduction in cost and also save on the tax angle

• Securing best of terms from the international market and

• 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 him or 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 registered 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

Ships, 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

Casualty insurance

That type of insurance that is primarily concerned with losses caused by injuries to persons and legal liability imposed for such injury or for damage to property of others. It also includes such diverse forms as Plate Glass, insurance against crime, such as robbery, burglary or forgery, Boiler and Machinery insurance, and Aviation insurance. Many casualty companies also write surety business.

Catastrophe

Event which causes loss of extraordinary magnitude, such as a hurricane or tornado.

Causes of loss

Under the latest commercial property forms, this term replaces the earlier term "perils" insured against.

Cede

To transfer to a reinsurer all or part of the insurance or reinsurance risk written by a ceding company.

Ceding Commission

In calculating a reinsurance premium, an amount allowed by the reinsurer for part or all of a ceding company's acquisition and other overhead costs, including premium taxes. It may also include a profit factor. See Overriding Commission.

Cession

The amount of a risk which the insurance company reinsures: the amount passed on to the reinsurer.

Chartered Property Casualty Underwriter (CCU)

Professional designation granted to persons in the property and liability insurance field who pass a series of rigorous examinations and meet specified eligibility requirements.

Claim

1. A formal request for payment of a loss under an insurance contract or bond; (2) The actual amount of the final settlement.

Claimant

One who seeks reimbursement for loss under the terms and conditions of the insurance contract.

Claim Amount

It is the amount payable by the insurer under a policy on a claim arising.

Claims-made coverage

A policy providing liability coverage only if a written claim is made during the policy period or any applicable extended reporting period. For example, a claim made in the current reporting year could be charged against the current policy even if the injury or loss occurred many years in the past. If the policy has a retroactive date, an occurrence prior to that date is not covered. (Contrast this with "Occurrence Coverage")

Claims reserve

Claims provision, provision for outstanding claims/claims outstanding, claims reserve, total claim liability.

Claim settling agents

They are appointed by insurer in a foreign country abroad for survey/settlement of claims arising out of policy issued in the home country for overseas medi-claim and marine insurance policies.

Classification clause (cargo)

A clause in a cargo insurance open cover which details the minimum classification for an overseas carrying vessel that is acceptable to the insurers for carriage of the insured goods at the premium rates agreed in the contract. Goods carried by lower class vessels are accepted under the open cover, subject to payment of an additional premium.

Clause

Sentences and paragraphs describing coverage's, exclusions, duties of an insured, and termination of coverage, and other such parts of the insurance policy.

Coinsurance

(1) In property insurance, a clause under which the insured shares in losses to the extent that he is underinsured at the time of loss. (2) In health insurance, a provision that the insured and insurance company will share covered losses in agreed proportion. In health insurance, the preferred term is "percentage participation".

Co-Insurers

Two or more insurers jointly covering the same risk.

Collision Coverage

Physical damage protection for the insured's own automobile(s) for damage resulting from a collision with another object or upset.

Combined ratio

A rough indication of the profitability of a property and liability insurer's underwriting operations, generally computed by adding the ratio of losses incurred to premiums earned and expenses incurred to premiums written.

Commercial General Liability (Cgl) Coverage Part

General liability coverage which may be written as a monoline policy or part of a commercial package. "CGL" now means commercial general liability forms which have replaced the earlier "comprehensive" general liability forms. The latest forms include all sub lines, provide very broad coverage, and two variations are available, "Occurrence" and "Claims Made" coverage.

Commercial Lines

Insurance for businesses, professionals, and commercial establishments.

Common law

Common law comprises the body of principles and rules of action, relating to the government and security of persons and property, which derive their authority solely from usages and customs of immemorial antiquity, or from the judgments and decrees of the courts. It is outside the laws created by enactment of statutes.

Comprehensive Coverage

Traditional name for physical damage coverage for losses by fire, theft, vandalism, falling objects and various other perils. On Personal Auto Policies this is now called "other than collision" coverage. On commercial forms, it continues to be called "comprehensive coverage".

Comprehensive General Liability Policy

A policy covering a variety of general liability exposures, including Premises and Operations (OL&T or M&C), Completed Operations, Products Liability, and Owners and Contractors Protective. Contractual Liability and Broad Form coverages could be added. In most jurisdictions the "Comprehensive General Liability Policy" has been replaced by the newer "Commercial General Liability (CGL)" forms which include all the standard and optional coverages of the earlier forms.

Comprehensive Personal Liability Policy (CPL)

A personal liability contract. It provides personal liability coverage for the individual and family needs arising out of numerous personal activities and situations, such as the ownership of residential property, ownership of pets, sports activities, and many other everyday activities.

Concealment

Deliberate suppression of material facts that would affect the validity of a policy of insurance.

Conditions

Those provisions in insurance contracts that qualify the insurer's promise of indemnity or impose obligations on the insured.

Consequential Loss

A loss arising indirectly from an insured peril.

Constructive Total Loss

A partial loss of sufficient degree to make the cost of repairing as much or more than the property is worth or is insured for.

Contractual Liability

Liability assumed under any contract or agreement. Coverage is generally limited in liability policies, but in most cases may be provided for an additional premium.

Contribution

The term relates to circumstances where more than one party covers the risk. Each party is deemed to be liable for his proportion of the loss. If the Assured recovers in full from one insurer, that insurer is entitled to recover from the other insurer for that part of the loss which should have been paid by the latter. The term is used in marine insurance, also in relation to contributions paid by the Assured in connection with salvage and / or general average.

Co-Payment: The portion, either a percentage or a fixed dollar amount, of a medical bill that a patient pays. The insurer pays the rest.

Cover Note

A cover note is a document issued in advance pending the issue of the policy, and is normally required if the policy cannot for some reason or other be issued straight away. Cover notes can also be issued during the course of negotiations to provide cover on a provisional basis. A cover note is not a stamped document but is honoured, all the same, by all parties concerned.

Credit insurance

A form of guarantee to manufacturers and wholesalers against loss resulting from default on the part of debtors.

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 in 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 the Tariff Advisory Committee has divided the whole of India into four Earthquake Zones. Details of classification of the Zones are provided in the Fire Tariff

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 General 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 Data Processing Coverage (EDP)

Specialized type of insurance designed to cover computer equipment, data systems, information storage media, and expense or income losses related to EDP losses.

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.

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

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.

Employers Liability Insurance

Coverage against common law liability of an employer for accidents to employees, as distinguished from liability imposed by workers compensation law.

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 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:

• 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.

• Property Insurance Coverage for all onshore property, including Land Rigs and Drilling Equipment

• Expenses of Well Control

• Third Party Liabilities, comprising of Specified Offshore and Marine Liabilities and other liabilities

• 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 another 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.

Escalation

Provision for automatic increases on some defined basis in premiums and sums insured.

Estimated Maximum Loss (EML)

An expression used in fire, explosion and material damage policies only. An estimate of the monetary loss which could be sustained by insurers on a single risk as a result of a single fire or explosion considered by the underwriter to be within the realms of possibility.

Ex Gratia

A payment made where there is no legal liability

Exclusions

Specified hazards for which a policy will not provide benefit payments. (Often called Exceptions)

Exposure

(1) State of being subject to the possibility of loss; (2) extent of risk as measured by payroll, gate receipts, area, or otherwise; (3) possibility of loss to a risk being caused by its surroundings.

Extended Reporting Period (ERP)

A period allowed for making claims after expiration of a "claims made" liability policy. Also known as a "tail".

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

• The whole adventure must be in peril

• The peril must be imminent

• The act must be voluntary

• The act must be reasonable and prudent

• The act must be for saving all the interests involved

• The sacrifice or the expenditure must be extraordinary in nature

General Average Expenditure

An extraordinary expenditure incurred by the ship owner 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 underwriter’s 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 ship-owner and the average adjuster appointed on the declaration of general average, from out of the deposits collected in connection with the general average adjustment. Ship-owner 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 ship-owner 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. Normally the personal lines of insurances and liability insurances confine the coverage to accidents taking place within the country unless specifically incorporated in the policy otherwise. Insurance for motor vehicles is extended on request to include Lahore, Nepal and Bhutan without any additional premium and Bangladesh by charging a flat additional premium as given in the All India Motor Tariff.

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.

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 possess 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 transaction

b) 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.

Good Faith

A basic principle of insurance. The Assured and his broker must disclose and truly represent every material circumstance to the Underwriter before acceptance of the risk. A breach of good faith entitles the Underwriter to avoid the contract. (Proposed changes in law may affect this definition - also see "Utmost Good Faith".)

Gramin Personal Accident Insurance

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

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 Medi-claim 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 Medi-claim Insurance

Medi-claim 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 requisites 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 requisites 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.

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

• the Insured or any occupier of the premises or

• 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.

Imported models

Vehicles manufactured in any country other than India. Insurance companies in India follow certain self-imposed guidelines in insuring imported vehicles in view of the problems encountered in connection with obtaining spare parts for replacement of damaged ones in the event of an accident and also excessive repair costs. It is also the normal practice for the insurer to arrange for an inspection of the vehicle proposed for insurance before accepting to cover.

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 transferred 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 to employer’s premises 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 Medi-claim 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

Internationally accepted and employed terms for contracts of sale, first published by the International Chamber of Commerce (ICC) in 1936. They were revised more than 7 times since then. 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

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 Claims

Incurred claims equal the claims paid during the policy year plus the claim reserves as of the end of the policy year, minus the corresponding reserves as of the beginning of the policy year. The difference between the year end and beginning of the year claim reserves is called the increase in reserves and may be added directly to the paid claims to produce the incurred claims.

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.

INDEMNIFY: To restore 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

Indian Carriage of Goods by Sea Act – Carrier not responsible

As per Article IV-Rule 2, significant Causes of loss/damage to cargo for which carrier is not responsible/liable are:

• Fire

• Perils of the Sea

• Act of God

• Act of War

• Strikes or lock-outs, Riots and civil commotions

• Insufficiency of Packing of cargo

• Insufficiency or inadequacy of marks

Any other cause arising without the actual fault or privity of the carrier

Indian Carriage of Goods by Sea Act – Limit of Liability of Carrier

As per Article IV-Rule 5 Monetary liability of the carrier for the cargo carried is limited to Sterling Pounds 100 per package or unit, or the equivalent of that sum in other currency, unless nature and value of such goods have been declared by the shipper before the shipment and inserted in the B/L.

By agreement between the carrier and the shipper another maximum amount may be fixed but that maximum amount shall not be less than Sterling Pounds 100.

Indian Carriage of Goods by Sea Act – Notice of Loss to Carrier

As per Article III-Rule-6, unless notice of loss or damage to cargo is given in writing to the carrier, before or at the time of removal of the cargo into the custody of the importer or his agent, or if the loss is not apparent, within three days, such removal shall be prima facie evidence of the delivery by the carrier as described in the bill of lading.

Notice within three days need not be given if the state of the cargo at the time of such removal been the subject of joint survey or inspection

Carrier will any case not liable unless suit is brought within one year after delivery of the goods or the date when the goods should have been delivered

Indian Carriage of Goods by Sea Act, 1925, The

The Act defines the rights, liabilities and immunities of a ship-owner in respect of loss or damage to the cargo carried

Indian Post Office Act, 1898

The Act defines the liability of the Postal Authorities for loss, mid-delivery, delay or damage to any article in the course of transmission by registered post.

Indian Railways Act

The duties, obligations and responsibilities of the railways are governed by the provisions of the Indian Railway Act 1890 and Amendment Act, 39 of 1961. The act also prescribes time limit and procedure for lodging claims and filing suits

Indian Reinsurer

An insurer who carries on exclusively reinsurance business and is approved in this behalf by the Central Government.

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. Indices published by the Reserve Bank of India and some industrial agencies furnish the inflation rate in respect of different category of goods which are depended upon insurers and surveyors while assessing the market value of the property insured as also the property affected by an insured peril.

Information Technology Insurance Policy

Policy providing coverage to Information Technology companies or Organisation against their civil liability for any claim for

• Breach of duty or

• For breach of contract where the act, error or omission giving rise to the breach of contract also gives rise to breach of duty

• Breach of confidentiality or

• 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 Marine Insurance

A branch of the insurance business which developed from the insuring of shipments which did not involve ocean voyages. Exposures eligible for this form of protection are described in the nationwide definition of Marine Insurance. Such diverse properties as bridges, tunnels, jewellery, and furs can now be written under Inland Marine forms.

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.

Institute Cargo Clauses

Treaty wordings developed by the International Chamber of Commerce. There are three basic sets of these clauses (A, B and C). The A clause covers "all risks", subject to specified exclusions. The B and C clauses cover specified "risks", subject to specified exclusions. (See actual ICC Clauses treaty wordings via "Ocean Reference" link at left)

Insurable Interest

A direct monetary interest in the insured property sufficient to result in monetary loss should the property be damaged or destroyed.

Insurable Risk

A risk which meets most of the following requisites: (1) The loss insured against must be defined; (2) It must be accidental; (3) It must be large enough to cause hardship to the insured; (4) It must belong to a homogenous group of risks large enough to make losses predictable; (5) It must not be subject to the same loss at the same time as a large number of other risks; (6) The insurance company must be able to determine a reasonable cost for the insurance; (7) The insurance company must be able to calculate the chance of loss.

Insurance

A system to protect persons, groups, or businesses against the risks of financial loss by transferring the risks to a large group who agree to share the financial losses in exchange for premium payments.

Insured

The person whose risk is transferred and shared; the party to an insurance agreement whom the insurer agrees to indemnify for losses, provide benefits for or render services to.

Insurer

The company or group offering protection through the sale of an insurance policy to an insured; the party to an insurance agreement who undertakes to indemnify for losses, provide pecuniary benefits, or render services.

Intermediary

Any person who, or organisation which, gives advice by way of directly offering, advertising or on a person-to-person basis in respect of an insurance product and includes the promotion of such a product or the facilitation of an agreement or contract between an insurer and a customer. Intermediaries are generally divided into separate classes. The most common types are 'independent intermediaries' who represent the buyer in dealings with the insurer (also known as independent brokers) and 'agents' (which generally include multiple agents and sub-agents) who represent the insurer.

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. A policy like this which is marketed abroad is yet to be introduced in India.

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.

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 statute 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

Kutcha Construction

Building having walls and/or roof of wooden planks, thatched leaves, grass, hay, bamboo, plastic cloth, asphalt cloth, canvas, tarpaulin and the like. Such constructions attract an additional rate of premium under the standard fire and special perils policy as per All India Fire Tariff. (See "All India Fire Tariff")

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 wilful 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.

Maintenance Warranty

A warranty incorporated in the 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, and 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 unskilful 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

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 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 ship-owner and disbursements i.e. amounts spent by the ship-owner 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. The Indian counter part of this Act is Marine Insurance Act, 1963

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 vessels, 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 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.

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; and

b) 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.

Maxi-cab

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.

Medicare

A federal health care program for people aged 65 and over, and for the disabled.

Moral Hazard

Moral Hazard refers to increase in probability of loss that results from dishonesty in the character of the insured person. Thus it is the dishonest tendencies on the part of the insured person that may induce that person to attempt to defraud the insurance company

Morale Hazard

An attitude that increases the probability of loss from a peril. The attitude of, "It's insured; so why worry?" is an example of a morale hazard

Mortgage Insurance

Life insurance that pays the balance of a mortgage if the mortgagor (insured) dies.

Mortgagee

The person who has loaned his money to another and taken the security of the property in exchange.

MPL (Maximum Probable Loss)

The largest loss thought probable under a given insurance policy. Normally applied to material damage risks where the total sum insured is not considered to be at risk from one loss event

Multi-Peril Policy

A package policy which provides protection against a number of separate perils. Multi-peril policies are not necessarily multiple line policies, since the combined perils may be all within one insurance line

Mysterious Disappearance

The disappearance of insured property in a mysterious, unexplained manner.

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

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

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 party’s 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.

Ombudsman

An authority established either by the company or the Government for the quick redressal of grievances

Open Cover

An agreement whereby the Assured undertakes to declare every item (e.g., shipment, vessel, etc., as appropriate) that comes within the scope of the cover in the order in which the risk attaches. The insurer agrees, at the time of concluding the contract, to accept all valid declarations up to the agreed limit for each declaration. An open cover may be for a fixed period or always open, subject to a cancellation clause.

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 someone 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.

Quote

An estimate of the cost of insurance, based on information supplied to the insurance company by the applicant.

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.

Sailing Vessels

These are country crafts propelled by wind power. They are either wooden built or steel built. These vessels are used to carry cargo between Indian Ports and also between Indian Ports and ports in countries in close proximity to India, such as Sri Lanka, Pakistan, Persian Gulf and East Africa.

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, ship-owners 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.

Salvage Loss

Occurs when the Underwriter agrees to settle a cargo claim by paying the difference between the insured value and the proceeds realized by selling the damaged goods.

Schedule

(1) A list of specified amounts payable for, usually, surgical procedures, dismemberments, ancillary expenses or the like in Health Insurance policies; (2) The list of individual items covered under one policy as the various buildings or animals and other property in property insurance; (3) In Marine policies, a list attached to a slip, open cover, policy or other document, usually detailing the rates of premium for various voyages, interests and risks.

Schedule of Loss

Notice completed by the insured documenting loss or damage to contents, personal property and / or stock.

Seaworthiness Warranty

There is an implied warranty in every voyage policy that the ship must be seaworthy at the commencement of the insured voyage or, if the voyage is carried out in stages, at the commencement of each stage of the voyage. To be seaworthy, the ship must be reasonably fit in all respects to encounter the ordinary perils of the contemplated voyage, property crewed, fuelled and provisioned, and with all her equipment in proper working order. Cargo policies waive breach of the warranty, except where the Assured or their servants are privy to the unseaworthiness. Breach of the warranty is not excused in a hull voyage policy, literal compliance therewith being required. Although there is no warranty of seaworthiness in a hull time policy, claims arising from unseaworthiness may be prejudiced if the ship sails in an unseaworthy condition with the knowledge of the Assured.

Security

The Underwriters subscribing a risk. The Insurers.

Self-Insurance

A form of risk financing through which a firm assumes all or a part of its own losses

Short Period Rates

Percentage of annual premiums charged for short period policies

Short Rate Cancellation

Cancellation with a less than proportionate return of premium: also known as Pro Rata Cancellation.

Solvency

Sufficient assets and income. It is the primary responsibility of a state's insurance department is to monitor insurance companies licensed to transact business within their state and make certain that they remain solvent and have the ability to pay the claims of their policyholders.

Speculative Risk

A condition in which there is a possibility of loss or gain

Sprinkler Leakage Insurance

Insurance against loss from accidental leakage or discharge from a sprinkler system due to some cause other than hostile fire or certain other specified causes

Standing Charges

Expenses which still have to be met even if a business cannot earn its full income owing to fire or other damage. These expenses do not diminish proportionately as a result of the damage

Stop Loss

(1) Any provision in a policy designed to cut off the insurance company's loss at a given point. Aggregate benefits and maximum benefits are an example; (2) A type of reinsurance designed to transfer the loss from the ceding company to the reinsurer at a given point.

Subrogation

It is defined as the transfer of rights and remedies of the insured to insurers who have indemnified the insured in respect of the loss

Subrogation Waiver

A waiver by the named insured giving up any right of recovery against another party. Normally an insurance policy requires that subrogation (recovery) rights be preserved.

Subsidence

Occurs when the ground under a building moves downwards, often as a result of drying out too much

Sue and Labour

Expenses incurred by the Assured or their representatives with the intention of preventing or minimizing a loss for which the Underwriter would have been liable. They do not include expenses incurred in general average or salvage acts, these being recoverable under the policy only as part of the Underwriter's liability for contribution to general average or salvage, if any. Sue and labour charges are recoverable under a policy that incorporates a sue and labour clause (SG policy), or in accordance with the wording of the policy (e.g., under the "Duty of the Assured" clause attached to a MAR policy).

Surrender Value

Surrender value is the amount payable to the policy holder on his surrendering his right under a policy and terminating the contract of insurance

Surrounding Property

Property belonging to the insured or in his custody or control except for the plant causing the damage or property being lifted

Surveyor

The company official who inspects property proposed and makes recommendations as to rating and loss reduction

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.

Umbrella Liability Policy

A liability policy designed to provide liability protection above and beyond that provided by standard liability contracts.

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 up to 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.

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.

WAIVE: To forego; to refrain from insisting upon application of an insurance deductible under specific conditions.

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 CLAUSE: A clause which entitles both Underwriter and Assured to take measures to prevent or reduce loss without prejudice to the rights of either party.

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

War Risks Time Policy-Government of India War Risks Scheme for Marine Hulls

A Scheme of the Government of India for insuring Indian Hulls against War and Strikes Risks. The scheme is applicable to all ships registered under the Merchant Shipping Act, 1958. The Scheme also applies to ships otherwise qualifying for registration, which are under construction or are purchased from foreign owners from the time they are at the risk of Indian owners. The scheme also applies to mechanised sailing vessels.

This is a voluntary scheme and is left to the ship-owner to participate or not.

Policies are issued by any of the Indian Insurers.

Warehouse to Warehouse Cover

The voyage through which the cargo is to be moved commences from the sellers warehouse and terminates on arrival at buyer’s warehouse. Since the cover for cargo encompasses this entire movement from the seller’s warehouse to the buyer’s 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 insurance 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.

Warsaw Convention

The Warsaw Convention, signed in 1929, is an international agreement governing the liability of the air carrier in case of damage caused to passengers baggage and booked cargo carried from one country to another. This convention now stands amended as Hague Protocol from 1963. The High contracting parties of the convention have given effect to the convention by enacting a legislation in their countries generally called Carriage by Air Act. The Indian Carriage by Air Act, 1972 which embodies the provisions of the convention limits the liability of the air carrier to a sum of 250 francs per kilogram of package weight unless the consignor declares the value of the consignment at the time of entrustment to the carrier.

Weekly Benefits (For Personal Accident Insurance)

They are paid for the period of temporary total disablement following an injury which is admissible under the policy

Whole Life Insurance

Life insurance payable to a beneficiary at the time of death of the insured, whenever that occurs.

Without Benefit of Salvage

A term in a marine insurance policy, whereby the Underwriters forgo their subrogation rights. A policy incorporating such a term is deemed to be a gambling policy in law, and is therefore invalid in a court of law.

Without Prejudice

The claim is paid on this occasion, although the Underwriter feels it does not attach to the policy, but this action must not be treated as a precedent for future similar claims.

Workers Compensation

(1) A schedule of benefits payable to an employee for injury, disability, dismemberment, or death as a result of occupational hazard. The payments are a liability of an employer; (2) insurance agreeing to pay the Workers Compensation benefits required by law on behalf of the employer.