General Insurance



Any one accident. The term refers to the maximum liability of the insurer in respect of all claims, both for bodily injury and property damages of third parties arising out of any one accident.


Any one year. The term refers to the maximum liability of the insurer under the policy for all claims preferred during the policy period.


In Marine Cargo and Marine Hull Insurance, 'Abandonment' is a condition precedent to a constructive total loss of the property insured. But the insurer is under no obligation to accept the abandonment.


Agreement to an offer, thereby leading towards conclusion of a contract. One of the fundamental requirements of any contract of sale. Applicable to Contracts of Insurance also.


An accident is a sudden, unforeseen and involuntary event caused by external and visible means.

Accident Insurance

Coverage for death or bodily injury resulting from accidental means. Cover will extend benefits for different consequences of accident, namely, death, Total disablement of either permanent or partial nature as also partial disablement of permanent nature. Cover can also provide for reimbursement of medical expenses towards treatment of accidental injury on payment of extra premium.

Acquisition Cost factor

Acquisition Cost incurred by the direct insurer towards procuring business, which is taken into account by the reinsurer while fixing the reinsurance commission for the reinsurance offered.

Acquisition Costs.

This refers to the expenses incurred by the Direct Insurer for acquiring Direct Premium. Normally commission expenses come under this category.

Act in force Clause

A Clause included in Excess of Loss Treaties pertaining to Liability Insurance, where such liability is statutory, to take care of changes in law or act about quantum of compensation during the cover period, by revision of rate and/or underlying loss retention as well as the limit of the excess of loss cover.

Act Liability with Fire &/or Theft

Provision under the Motor Insurance Tariff to cover a motor vehicle against act liability of the insured together with restricted own damage to the vehicle caused by Fire, External Explosion, Self-ignition or lightning or burglary, house breaking. There is a percentage reduction from the premium applicable for the own damage portion of the cover in view of the above-restricted scope of the cover, which is provided in the tariff.

Act of God Perils

Any event not caused or contributed to by man. Some sudden and irresistible acts of nature that could not reasonably have been foreseen or prevented, such as floods or exceptionally high tides, storms, lightning, earthquakes etc. constitute Act of God Perils.

Act only Policy

Insurance Coverage for all motor vehicles to indemnify the insured up to the limits prescribed in the Motor Vehicle Act, 1988 in respect of his legal liability to pay compensation for death or bodily injury to any third party or damage to the property of any third party caused in any accident or series of accidents arising out of one event in so far as is necessary to meet the requirements of section 147 of the Motor Vehicle Act, 1988.

Actual Total Loss

An actual total loss of a property is said to take place when

1. The insured is irretrievably deprived of the subject matter insured

2. The subject matter is so damaged by an insured peril as to cease to be a thing of its kind-loss of specie

3. In so far as it relates to a vessel and/or cargo thereon, the vessel is declared as missing.


Additional coverages to your basic policy.

Additional Expenses-Strikes

If the destination port is strike-bound at the time of arrival of the ship carrying cargo meant for that port, the ship owner may exercise his liberty granted by the contract of affreightment and discharge the cargo at a nearest alternate port and absolve himself of any further responsibility to the cargo. In such circumstances, the cargo owner may have to incur additional expenses in reforwarding the cargo from that port to the intended port of discharge. The ordinary cargo policy does not cover these expenses. If the cargo owner wishes to protect his interest against such eventuality, he has to avail an "additional expenses (strikes) cover" extension for all his shipments that may be effected during a period of 12 months. This extension will not be available for shipments if cover is sought when the strike has commenced in the particular area.

Adverse selection

Selection against the insurance company, the tendency of more poor risks to buy and maintain insurance than good risks.


Two types of agents sell insurance: (1) Independent Agents are self-employed business people who typically represent more than one insurance company and are paid on a commission basis; and (2) Exclusive Agents represent only one insurance company and may be salaried or work on a commission basis.

All risk

Insurance against loss or damage to property arising from any fortuitous cause, except such as may be specifically excluded.


A survey of property made for determining its insurable value or the amount of loss sustained.


The passing of beneficial rights from one party to another.

Assigned risk

A risk which Underwriters do not care to insure, but because of state law or otherwise, the insured must be protected and the insurance is therefore handled through the state and assigned to companies.

Assumed liability

Liability which would not rest upon a person except that he has accepted responsibility by contract expressed or implied. This is also known as contractual liability.

Automobile fleet policy

A commercial automobile policy covering five or more automobiles.


Balances-Reinsurance Company

The direct insurer will be having transactions with the reinsurance companies either on treaty basis or facultative basis, which will involve premium cessions as well as claim recoveries. This will also have reinsurance commission transactions. All the balances in the reinsurance accounts are grouped under the reinsurance company balances and shown on the assets side or liability side of the balance sheet, depending on the nature of balance.

Back-Up XL Covers

Sometimes it is possible that XL Cover expires before its natural expiry date due to one reinstatement provision exhausting the cover limits by two total losses. Back-Up XL Covers are arranged as additional reinstatement covers for the remaining period.

Baggage insurance

Insurance Policy providing cover against loss of or damage to accompanied personal baggage of the insured or insured's family member(s) due to fire, theft or any accident during the course of journey including stoppage en-route, anywhere in India. The policy normally excludes routine travels like going to and returning from office, theft from unattended vehicle, articles worn on the body of the person, war etc. It is possible that the policy is modified to suit the exact needs of the proposer subject to mutual consent and the insurer following the procedure of "file and use" laid down by the Regulatory Authority.


A person who has legal possession of goods belonging to others and is supposed to take such care of goods as the owner would take. He has the insurable interest in such goods and can insure the same in his name.


Contract concerning transfer of property from bailor to a bailee.


The person who transfers his property to the temporary care, control and custody of another, while retaining the ownership with him.


Material carried in vessel to ensure stability when the vessel is without any cargo.

Bank Guarantee

In relation to Insurance, guarantee executed by a bank in favour of an insurer, guaranteeing payment of premium by the insured in relation to certain policy/policies, within the period stipulated in the guarantee. In India as per the provisions of the Insurance Act and the Rules thereunder Premium shall be physically paid to the insurer in almost all cases on or before the commencement of cover. The Act and the Rules provide that only in cases where the premium is not ascertainable at the time of commencement of cover a bank guarantee shall be accepted by the insurer.

Bankers Indemnity Policy

A specially designed insurance policy for the banks. Main Coverage is against

• Loss/destruction of money and/or securities because of fire, riot and strike terrorism, burglary, whether in the premises or outside, caused by either employees or other persons

• Money and/or securities, whilst in transit, lost, stolen, misappropriated or made away with, either due to negligence, or fraud of the employees of others

• Forgery or alteration committed by employees and outsiders, resulting in financial loss to the bank

• Loss of money or goods held in trust by reason of dishonesty or criminal act of the employees


Smaller size Vessels for carriage of cargo from port to port-most of them used for carrying bulk cargo-some used for carriage from shore to ship. They are either dumb or power driven. They have the risk of capsizing during inclement weather


Wrongful act wilfully committed by the master or crew to the prejudice of the owner or the charterer of the vessel. Deliberate running aground, setting on fire and scuttling of the ship by the crew are instances of barratry. Loss or damage arising from barratry of the ship is covered under ITC-Hulls and ICC (A) Clauses.

Base Premium

Premium charged by the direct insurer on the policy

Basic Commission

The commission on a reinsurance proportional treaty which is always applied on the written premium of the treaty.

Basic Premium

The Gross Premium charged by the insurer to the insured under a policy.

Basic Rate

The rate of premium shown in the Rate Guide or Manual of the Insurance Company for a specific insurance cover.

Basis of Loss Settlement

A separate section inserted in all the policies spelling out the basis of settlement of different types of claims under the policy.

Basis of Valuation Clause

1. Provision describing the method of calculating the value of cargo for the purpose of declaration under marine cargo insurance open covers and open policies.

2. Provision appearing in the conditions relating to the fire declaration policies for stocks, dealing with the valuation of stocks for periodical declaration purposes.


An individual designated in a will to receive an inheritance, or the individual designated to receive the proceeds of an insurance policy, retirement account, trust, or other asset.

Bill of Exchange

It is the bill drawn by exporter against the importer.

Bill of Lading

A bill of lading is a receipt signed on behalf of the ocean carrier, indicating in what apparent order and condition the goods have been received on board. It is not necessarily the complete contract of carriage of goods but is usually the best evidence of the contract. It is also a document of title and thus a document of transfer.

Binder (or binding receipt)

In lines other than life and health, a binder is an acknowledgement (usually from the agent) that insurance applied for is in force whether or not premium settlement has yet been made or the policy issued. In life and health insurance, binders are not issued, but if premium settlement is made with the application, what is often erroneously referred to as a "binder" is issued. Actually this is a conditional binding receipt.

Blanket insurance

(1) Property-liability insurance that covers more than one type of property in one location in one policy or form instead of under separate items, or one or more types of property at more than one location; (2) A contract of health insurance that covers all of a class of persons not individually identified.

Bodily Injury

Physical injury, including sickness, disease, mental injury, shock or death.

Bodily injury liability

The liability which may arise from injury or death of another person.

Boiler and machinery policy

Insurance against loss due to accidents to boilers, pressure vessels or other machinery including the equipment itself, as well as liability arising out of the accident.

Builder's risk coverage form

A commercial property coverage form specifically designed for buildings in the course of construction.

Builder's risk insurance

Insurance against loss to buildings or structures in the course of construction.


It is a theft committed by breaking into or out of the premises. Evidence of breaking in, is necessary.

Burning Ratio

The ratio of losses suffered to the amount of insurance in effect.

Business Interruption Insurance

Insurance for a business owner against losses resulting from stoppage of business because of fire or other insured peril. The insurance provides reimbursement for lost net profits and necessary standing expenses.

Breach of condition

When a condition of the insurance contract is broken by the assured, the insurer may avoid the contract from the inception.


Middleman who represents an insured in the solicitation, negotiation or procurement of contracts of insurance, and who may render services incidental to those functions. He also represents insurer for certain purposes such as delivery of the policy or collection of the premium.



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.


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.


Consignments in a completely knocked down condition, which are assembled at destination to be made into whole units.


Consignments in a completely knocked down condition which are assembled at destination to be made into whole units.


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.


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.


(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.


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.


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.


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.


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.


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.


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


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.


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


(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".


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.


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


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.


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.


D.A.F (Delivery at Front)

One of the terms of contract of where the seller undertakes to deliver the goods at a named place or point at the frontier (at the border between the two nations)

D.D.P (Delivery Duty Paid)

One of the terms of contract of sale where the seller undertakes to deliver the goods at the named place in the country of the importer and also pay the customs duty.

D.D.U (Delivery Duty Unpaid)

One of the terms of contract of sale where the seller undertakes to deliver the goods at the named place in the country of the importer, but that the duty for the goods shall be paid by the buyer.

D.E.F (Delivery ex Ship)

One of the terms of contract of sale where the seller where the seller has the responsibility to arrange shipment of the goods up to the destination port and bear costs as well as risk up to that point.

D.E.Q (Delivery ex Quay)

Similar to a D.E.F. contract but that the seller has responsibility to see that the goods are placed in the quay.


Robbery committed by a group of persons. Standard Burglary Insurance Policy issued to both business houses and dwellings cover loss of property arising out of a dacoity.

Damage by hooks, mud, oil or other extraneous substances.

Group of extraneous perils covered as an extension to the coverage granted under the marine cargo insurance policy subject to the Institute Clauses ICC © or ICC (B) on payment of appropriate additional premium. The losses grouped under this category are, damage by hook, oil, mud and contamination by any extraneous matters. The hooks used by the dock labour for moving goods in bales, rolls or bags cause extensive damage and loss of contents. Contamination by mud, acid and other chemicals is also frequent in respect of bagged or baled cargo.


Monetary compensation awarded at law for a civil wrong or a breach of contract

Date of issue

Date on which the policy, evidencing the coverage has been issued by the insurer

Days of Grace or Grace Period

Period of time after the due date of a premium during which the policy remains in force (when both coverage of risk is available and also the premium can be paid without any late fees).

DCDRF (District Consumer Disputes Redressal Forum)

Complaints against insurers for deficiency of service can be filed by the policyholders in the district forums where the compensation claimed does not exceed Rs.5,00,000/-. The District forums have jurisdiction over one or more districts.

Dead Well

A well that has ceased to produce oil or gas either temporarily or permanently.

Dead freight

When space is booked on a vessel but is not used by the party who booked the space, freight is still payable. This is called Dead freight. The right to such dead freight is normally exercised by the ship owner only under charter parties


The maximum weight in tons of the cargo, stores, water, fuel and crew, all put together which a ship can carry when loaded down to her load-line level.


Authorised agent of manufacturer for sale of the manufactured goods/vehicles


Termination of life as a result of an accident. In order that claim for such death is recoverable under the policy, the beneficiary should furnish to the insurer a death certificate issued by the concerned authority. Sometimes a post-mortem certificate may also be insisted to establish the cause of death.

Death Benefit

A payment made to the nominee or the legal heir of the insured under a Personal Accident Insurance Policy in the event insureds death.

Death Claim

Claim lodged under the policy by the beneficiary for the death of the insured or the insured person.


A bond that is backed only by the general credit of the issuing corporation. No specific property is pledged as security behind the loan.

Debris Removal Clause

The Clause, when attached to a standard fire and special perils policy, on payment of an additional premium provides cover for an additional amount, in excess of the limits prescribed in the standard fire policy, as agreed to between the insurer and the insured towards costs and expenses necessarily incurred by the insured for removal of debris resulting from an accident.

Deceptive practice

Concealment of actual fact. Eg. Insurance official or the agent giving impression to the prospect of some coverage being provided in the policy while no such coverage appears in the policy document

Deck cargo

Cargo carried on deck of a ship. Insurance on cargo is normally deemed to apply only to cargo carried under deck unless specifically incorporated in the policy to the effect that the cargo is carried on deck.


Statements in an insurance contract that provide information about the property or life to be insured and used for underwriting and rating purposes and identification of the property or life to be insured.

Declaration Clause

A clause which appears in marine cargo insurance open policy or open cover. This provides that all dispatches coming under the purview of the open cover/open policy should be declared for insurance without exception, whether arrived or not.


Refusal of an insurer to accept a risk proposed for insurance or to renew an existing insurance


The proportion of loss that the insured bears in respect of any claim. This will be in two forms, namely,

  • Amount of excess, which will be mentioned either as a fixed amount or a percentage of the sum insured or the claim amount.

  • Time excess by which the insured will not be entitled to the claim relatable to a specific period (usually number of days) stated in the policy

Deductible, period

Deductible to be applied in respect of each claim expressed in the form of number of days claim relating to which will not be payable under the policy.

Defeasible Interest

A term relevant to marine adventure. An interest that may cease to exist after commencement of voyage. E.g. an importer insuring the goods which he bought from overseas seller, although he is entitled, if the seller be guilty of delay or other default, to reject the goods, or treat them at seller's risk


One of the parties in a negligence law suit from whom the other party seeks relief for certain wrong complained of by the latter to have been committed by the former.

Defence Costs

Costs and expenses incurred by the defendant in a law suit in connection with defending the suit filed against him by the plaintiff (the party seeking relief from the defendant).

Dental Insurance

Coverage for dental services under a group of individual policy.


Decrease in the value of any type of tangible property over a period of time resulting from use, wear, tear, deterioration, and obsolescence.


A condition that curtails to some degree a person's ability to carry on his normal pursuits. A disability may be partial or total, and temporary or permanent.

Disability Insurance

A type of health insurance that pays a monthly income to the policyholder when he or she is unable to work because of illness or accident.

Discovery Period

The time allowed to the insured after termination of certain bond and policy provisions to discover that he has sustained a loss which occurred during the period covered by the contract.

Double Insurance

If the insurance policy is taken from more than one underwriter where period of insurance, subject matter of insurance and sum insured are same, then this is called double insurance.

Duty of Assured Clause: This appears in the Institute Cargo Clauses published for use with the MAR form of policy. It directs the attention of the Assured, his agents etc., to the duty (as required by the MIA, 1906) to take reasonable measures to avert or minimize any loss which is recoverable under the policy, also to ensure that all rights against carriers and others are properly preserved and exercised. Underwriters agree to reimburse the Assured for any reasonable expenditure incurred by his compliance with the clause, in practice, these expenses are termed "sue and labour" charges (see Sue & Labour).


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.


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.


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.


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.


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.


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.


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


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


(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".


F.A.S. (Free Alongside Ship)

One of the terms of contract of sale where the seller has the responsibility to place the goods on the quay alongside the ship up to, which point, they remain at his risk. The transport cost up to that point is borne by him. Once goods are so placed the risk gets transferred to the buyer including all further costs.

F.C. &S Clause

A standard clause in a marine insurance policy by which the insurer excludes coverage of loss due to "capture" and "seizure" as well as "arrest, restraint or detriment, and the consequence thereof or of any attempt thereat (piracy excepted), and also from all consequences of hostilities or warlike operations, whether before or after declaration of war."

F.C.A. ((Free Carrier)

One of the terms of contract of sale where the seller has the responsibility to deliver the goods to a carrier to be named by the buyer at a place also to be notified by the buyer. The goods are at risk of seller till such delivery and the risk thereafter is transferred to buyer including further costs.


First Information Report lodged with the Police Authorities in case of a Fire or Explosion or Burglary in the insured premises or Road accidents involving third parties. This is one of the documents of claim, especially when claims for third party liabilities are lodged under the policy.


One of the contracts of sale relating to imports or exports, where the seller is responsible to place the cargo on board the ship and obtain the bill of lading from the steamer company. Thus he becomes responsible for any loss to cargo prior to its being placed on board the ship. It is for the buyer to arrange for marine insurance for cargo for the voyage and until it reaches the destination. In normal practice the buyer in F.O.B. contracts insures the cargo from warehouse to warehouse.

F.O.B. Insurance

An Insurance cover taken by the seller of the cargo to protect his interest from the time it leaves his premises and until it is placed on board the ship and a clean bill of lading is obtained.

Factual Expectation

A fair and strong expectation of an occurrence happening resulting in someone getting an insurable interest in a property in due course. In marine insurance a person can insure a cargo in which he does not have an insurable interest at the time of proposing for the cover but he will have a factual expectation of acquiring such an interest at a later date.

Facultative Obligatory Open Cover

This is similar to Facultative Obligatory Treaty but with only one difference. This has no line limitation whereas the Facultative Obligatory treaty has.

Facultative Obligatory Treaty

An agreement whereby the ceding company has option to cede (not bound to), as in the case of pure facultative placements but the reinsured is bound to accept (no option to decline), as under a treaty arrangement, a share of a specified risk underwritten by the ceding company. This treaty has thus both the characteristics of facultative cessions and of obligatory treaties. It normally comes after surplus treaties and gives automatic reinsurance facilities to the ceding company when the capacity of the surplus has been exhausted.

Facultative Reinsurance

Oldest method of reinsurance. Each risk is considered separately and reinsured. It is necessary for the insurance company to supply the reinsurer all the material information about the risk to enable the latter to decide about acceptance of reinsurance and the extent thereof as also the rate.

Failed Well Insurance

Coverage providing compensation to the insured if a dug well fails to yield specified quantity of water. Compensation is also payable for collapse of aside walls whilst digging is in progress.

Insurance provided for both open wells and bore wells but for new wells only.

Failure of Consideration

Occurs when the risk for which the insurer has accepted the premium fails to attach. The full premium paid is returnable in such circumstances, except where there is a fraud

Fair Market Value

Price at which an asset or a service passes from a willing seller to a willing buyer, where both seller and the buyer are assumed to be rational and have a reasonable knowledge of the relevant facts.

Fair Value Exchange Account

A new account created as per the IRDA Regulations. As per the regulations, Listed Equities, Securities and Derivative Instruments shall be the assessed for the fair value on the date of the Balance Sheet. The fair value is the lowest of the quotations to those securities or instruments in any of the stock exchanges. An Insurer has to compare such fair value with the book costs and any impairment in the value has to be transferred to the Fair Value Exchange Account. All unrealised gains and losses due to changes in the fair value of the Instruments have to be taken to the Fair Value Exchange account and as and when these gains or losses are realised, the same will be transferred to Profit and Loss A/c.

Fall or Displacement of building clause

A provision appearing in the Standard Fire and Special Perils Policy to the effect that all insurances under the policy shall cease on expiry of seven days of fall or displacement of any insured building or part thereof or of the whole or any part of any range of insured buildings or of any structure of which such building forms part. Also known as "Fallen Building Clause"

Family Coverage

Property and/or personal lines of insurance where in addition to the individual, his or her dependants are also covered as insured persons.

Farmers Package Cover

A comprehensive package insurance for the benefit of the farmers to cover the individual, his/her family members, property in the house, animals, animal driven carts, agricultural tractors etc. against all accidental loss or damage and accidental death and injury.

Fatal Accidents Act, 1855

Act which provides that, if the death of a person is caused by wrongful act, neglect, or default, an action for damages is maintainable by the legal heirs of the deceased against the party causing injury. This act abolished the long standing rule of common law according to which a civil action for damages died with the person to whom or by whom the tort was committed.


Measurement for assessing sea depth on the basis that one fathom equals 1.8288 metres.

Field Staff

Company staff whose work is mainly outdoors and comprises of soliciting and procuring insurance business either directly or through the medium of insurance agents. They are remunerated by monthly salary and allowances like any other company employees but in addition are paid growth and profit incentives in relation to the business procured by them. They also enjoy certain perks. This cadre exists as of now, only in the four nationalised insurance companies and is governed by a special scheme known as 'Development Officers' Scheme'.

File and Use Procedure

Formal submission of an insurance product with full details of coverage and rates, terms and conditions applicable to the Regulator before marketing the product. If no reply comes from the Regulator within the specified period the product is deemed approved.

Financial Reinsurance

A substitute to the conventional reinsurance where funding is used as a technique to spread loss or profit over a period of years after discount for handling costs, fees, commission etc. It is mostly used as a complementary arrangement for traditional reinsurance where full capacity is not available.

Financial Risks

Risks solely associated with finance extended or received, in different forms, by an individual or an enterprise, resulting in the beneficiary of finance not carrying out or not being able to carry out his/its financial obligations under the contract. Certain financial risks are insured by general insurers.

Financial Underwriting

A method of evaluating the results of a reinsurance treaty. Under this method factors like interest earned on the premium income and loss or gain in foreign exchange are also taken into account.

Finished Goods

Products or goods which have been fully manufactured, assembled or built and are ready for sale.


A combustion accompanied by a flame or glow, which escapes its normal confines to cause damage.

Fire & Theft Risks

In relation to motor insurance, refers to the restricted cover extended to a vehicle which is in garage and out of use. All India Motor Tariff provides that policies may be issued to cover only the risks of Fire (which will include Riot, Strike, Earthquake, Flood etc. perils also) and/or Theft whilst the car is in garage and out of use at special reduced rates of premium.

Fire and Allied Perils

A term which by convention is used to denote the following perils in addition to Fire

  • Lightning

  • Explosion/implosion

  • Aircraft Damage

  • Riot, Strike, Malicious and Terrorism Damage

  • Storm, Cyclone, Typhoon, Tempest, Hurricane, Tornado, Flood and Inundation (to be taken as extension)

  • Impact Damage

  • Subsidence and Landslide including Rock slide

  • Bursting and/or overflowing of Water Tanks, Apparatus and Pipes

  • Missile testing operations

  • Leakage from Automatic Sprinkler Installations

  • Bush Fire

  • Earth-Quake (to be taken as extension)

Fire Brigade

Group of people specialised/trained in extinguishment of fires.

Fire insurance

(1) Insurance contracts that indemnify an insured for loss caused by the destruction of the insured's property resulting from a fire; (2) The field of insurance that provides insurance policies on the insured's property for a variety of perils including fire.

Faulty Design

Term relating to Builder's Risks Insurance. The relevant clause when attached to the Builder's Risks Insurance Policy provides cover for loss or damage to the insured property arising from faulty design of any part or parts thereof but does not extend to cover any repairing, modifying, replacing or renewing such part or parts, nor any cost or expense incurred by reason of betterment or alteration in design.

Favoured Reinsurance Terms

Reinsurers sometimes insist that reinsurance treaty terms should be same for all reinsurers of a treaty in non-reciprocal trading. There should be no discrimination by concessions to a few. Reinsures accept a share subject to 'favoured reinsurer's terms'

FEA Discount

Discount granted as per tariff for installation of Fire Extinguishing Appliances in the insured premises. Discount ranges from 2.5% to 10% on the premium depending upon the installations

Feasibility Study

Study carried out to decide workability of a project from various factors relating to physical, economic, environmental, political etc. aspects. Such a study is normally undertaken with the help of experts in various fields.

FGU Losses

"From Ground Up" Losses - A term used in connection with Excess of Loss Reinsurance, which refers to the incurred losses of protected portfolio of an XL cover which are also the ultimate net loss for the XL cover.

Fidelity Exclusion

  • A provision in burglary and money insurance policies excluding loss caused by the infidelity of the employees of the insured.

  • A provision in liability and professional indemnity policies excluding coverage for dishonest act of the insured.

Fidelity Guarantee Policy

An Insurance Policy which reimburses an employer for losses caused by dishonest or fraudulent acts of employees.


A person who holds something in trust for another.

Fire Engine

A motor truck equipped with water tank, pipes etc. to spray water, chemicals etc. on fires to put them off. If fire engines are maintained by the insured, a discount is given on the fire premium rate in recognition of the said feature as a risk improvement feature.

Fire Extinguisher

Instrument that uses non-combustible substances like carbon dioxide to extinguish a fire, by depriving it of oxygen.

Fire Hazards

The physical or chemical properties of a matter of whatever state which makes it susceptible to the risk of fire in varying degrees.

Floater Policy

A policy under the terms of which protection follows moveable property, covering it wherever it may be.


A provision in freight insurance conditions which exempts the insurer from particular average losses, in any one accident, under 3%. The provision is waived if the loss is caused by fire, or by the ship stranding, sinking or being in collision.


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.


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" 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.


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.


Hazardous substance

In relation to The Public Liability Insurance Act, 1991, means a list of chemicals with quantities categorized as hazardous substances and published in the form of a Notification by the Central Government for application of Public Liability Insurance Act. The Act Provides for public liability insurance for the purposes of providing immediate relief to the persons affected by accident occurring while handling hazardous substance (See "Public Liability Insurance Act. 1991")

Hit and run motor accident

Accident arising out of the use of motor vehicle or motor vehicles the identity whereof cannot be ascertained in spite of reasonable efforts for the purpose.

Hague Rules

Following an International Maritime Law Conference in Brussels in 1922 a set of rules was agreed to establish the rights and immunities of carriers in respect of the carriage of goods by sea. Many of the countries agreeing to the rules later incorporated them in statutory Acts, such as the Carriage of Goods by Sea Act, 1924.

Hail Risk Insurance

Insurance against Hailstorm for Crops given as a part of the Crop Insurance Cover.

Hand Appliances

Any of the portable fire extinguishing devices containing chemicals to put out a fire. Hand appliances are basic requirements for a risk to be considered for a discount in the fire premium rating under a Standard fire and special perils policy. (See "F.E.A. Discount")


A condition which may create or increase the chance of loss arising from any peril

Hazardous Goods

Goods in any state (solid, liquid or gas) susceptible to the risk of fire in varying degrees according to their physical properties. Hazardous Goods are categorised as I, II, III and IV and rated accordingly, for the purpose of insurance, under the Standard Fire and Special Perils Policy.

Hazardous Risks (Fidelity Guarantee Insurance)

Risks considered not good for insurance because of the very high hazard associated therewith and the high incidence of claims. (Ex. Jewellery Sales persons, Cashiers in eating houses, cinema houses and other places of entertainment, Treasurers of societies or associations, employees of bullion merchants and of works of art dealing in antiques fur and valuables.)

Hazardous Sports

In relation to Personal Accident Insurance, refers to sports activities which carry with them high hazard, like racing on wheels or horseback, big game hunting, mountaineering, winter sports, skiing, ice hockey, ballooning, hang gliding, river rafting, polo etc. Persons engaged in these sports are classified as high risk groups and attract extra premium over normal, if the proposal is accepted by the insurer.

Health Insurance Business or Health Cover

Means the effecting of contracts which provide sickness benefits or medical, surgical, or hospital expense benefits, whether in-patient, or out-patient, on an indemnity, reimbursement, service, prepaid, hospital or other plans basis, including assured benefits and long-term care.

Heating and Sweating

The former is a risk which exists in respect of cargo prone to heating by spontaneous combustion .e.g. Coal, oil cakes etc. in bulk. Sweating refers to the water damage caused by condensation of water in the vessel or container hold, under circumstances of different climatic/atmospheric conditions during the voyage.

Heating or drying process

A process carried out in a manufacturing unit where by certain property is heated and dried to remove the water contents. Any loss/damage to the property due to over heating or drying is not covered under a standard fire and special perils policy.

Heavy Industry

Traditional Production Industries in the automobile, steel, rubber, petroleum and raw material areas, requiring high capitalisation and producing large quantities of output. Heavy Industry employs many people and is often beset with environmental impacts.


Strategy adopted by importers or exporters in connection with future purchases or sales, to overcome the loss caused by price increase or decrease as the case may be due to exchange fluctuations. Protection is obtained by hedging against exchange movements by entering into forward contracts.


Robbery with violence or threat of violence. A risk which is covered under the Standard Burglary Insurance Policy

Homogeneous Exposures

Risks within a group under study that have, to a great extent, uniform characteristics as regards exposure to similar loss events and expectation of losses. Study of homogeneous exposures is carried out for the purpose of fixing rates of premium and terms and conditions in connection with insurance coverage

Homogenous Risks

Properties, interests or activities which are exposed to mostly similar types of perils and which normally meet with similar loss situation in the event of such perils occurring. Insurers consider homogenous nature of risks by evaluating them according to a) cause and b) effect with the aim of quantifying probabilities and severity in order to fix uniform rates of premium, terms and conditions coverage etc.

Honey Bee Insurance

Coverage for hives and/or bee colony belonging to the co-operative societies against all accidental losses or damages to them. Settlement of claim is as per agreed value representing the cost of hive and cost of bee colony which will be attached to the policy in the form of a valuation table.

Hospital Confinement Indemnity Insurance

Insurance Coverage to provide for a fixed compensation on a daily basis for the period of treatment in a hospital or a nursing home by the insured for any illness, injury or sickness, as against the conventional medi-claim policies which provide for reimbursement of actual expenses incurred for treatment. Any such product will have to be marketed in India after adopting the '"file and use" procedure laid down by the Regulatory Authority.


Admission of a patient in a hospital or a nursing home and treatment to him for injury, illness, sickness or disease for a minimum of 24hrs with substantiating treatment.

Hospitalisation Insurance

Insurance Coverage to individuals providing for reimbursement of expenses incurred towards hospitalisation treatment in connection with any injury, illness, sickness or disease subject to the Room Rent limits, Sum Insured limit & capping as mentioned in the policy governed by exclusions. Individuals, as also their dependants can be covered under the policy.

Hostile Fire

A fire which does not confine itself to its normal bounds and spreads beyond its habitat. For example the fire in the gas stove spreads to the nearby items and results in a big fire. A Hostile Fire is covered under the policy which is extended to cover Fire Risks.

Hot Testing

In relation to project insurance, refers to

  • operational tests, which include the checking of parts, elements and/or production lines of insured property under full or partial load and normal or simulated operating conditions including the use of feedstock or other material for normal processing or other media for load simulation. In electrical power stations hot testing means checking after connection to a grid or other load circuit of electrical generating, transforming, converting or rectifying equipment.

  • commissioning tests/acceptance tests which in turn mean operation of insured property under production conditions for the purpose of attaining (quantity, quality) specification requirements.

Hours Clause

A Clause incorporated in XL Reinsurance wordings to define Any One Event of Loss for the purpose of loss recoveries from the XL Cover. As per this clause Any One Event is defined by consecutive number of hours as per details below:

  • 72 consecutive hours are taken as one event for Storms, Earthquake, Tidal waves, Seaquake, Volcanic Eruption.

  • 168 consecutive hours are one event in case of floods.

  • Man-made catastrophic losses caused by riots and civil commotion are defined as 72 consecutive hours for one event in any one city.

  • 168 consecutive hours are taken as one event for any other catastrophe.


"A person is said to commit house breaking who commits house trespass if he effects his entrance into the house (or any part of it), for the purpose of committing an offence, or having committed an offence therein, he quits the house (or any part of it), such entrance or exit being made in the six ways as described in the Penal Code"

Householders Comprehensive Insurance

A package of insurance designed to provide householders with a broad range of property and liability coverage, pertaining to events at home as well outside.

Hull Insurance

Insurance on the ship, its machinery and equipment


A tropical storm marked by extremely low barometric pressure and circular winds with a velocity of 125 Kilometres an hour or more.

Hurricane Insurance

Part of a group of perils namely "Storm, Cyclone, Typhoon, Tempest, hurricane, Tornado, Flood and Inundation" which is inbuilt in the coverage under the Standard Fire and Special Perils policy. This group of perils can, however, be opted out by the policyholder, if he desires to reduce premium cost.

Hut Insurance

An insurance coverage to dwelling huts in rural areas constructed with financial aid from Banks/Co-Op/Govt. Institutions. Cover is against Fire, Earthquake, Flood and Inundation, Storm, Impact damage, Riot and Strike, Terrorism, Malicious damage etc. Huts are insured for an agreed value of Rs.6000/- each.

Hydrant System

A large discharge pipe system with valves at various places for drawing water from a water-main. Installation of Hydrant System together with the existence of Hand Appliances will entail the insured to a discount in the premium rate under the standard fire and special perils policy.


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


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.


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.


Cash flow from all sources, normally expressed on an annual basis


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.


Recipient of an indemnity payment


Provider of an indemnity payment


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.


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.


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.


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.


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.


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.


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.


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.


Jack-up Rig

In relation to energy risks, an offshore drilling structure with tubular or derrick legs that support the deck and hull. When positioned over the drilling site, the bottoms of the legs rest on the seafloor. A jack-up rig is towed or propelled to a location with its legs up. Once the legs firmly positioned on the bottom, the deck and hull height are adjusted and levelled.


Throwing overboard of a cargo. A step resorted to by the captain of the vessel to save the vessel and/or other interests in the vessel in time of common peril. Claim for loss of cargo so jettisoned is recoverable under the marine insurance policy subject to any of the Institute Cargo Clauses as long as the common peril is an insured peril.

Jewellers Block Policy

An insurance package for the needs of the jewellers. The policy covers

  • Stock-in trade of jewellers kept in the premises

  • The stock whilst in the custody of the partners/employees and the insured's agents

  • The stock whilst in transit by insured post parcel, air freight and through angadias/couriers as also

  • The office furniture, fixtures and fittings in the premises and safes at residence of concerned persons.

against fire and allied perils, burglary and theft. The policy can be further extended to cater to any other specific needs of the jewellers.

Joint Account XL Covers

Also called Common Account XL Covers which are arranged to protect both retained quota and reinsured quota on each and every risk. This arrangement is also called "Reinsurance for Joint Account (RFJA)

Joint and Several Liability

A legal term used in the definitions of liability , meaning that a decree in a court of law, if made joint and several, may be enforced against all the parties sued against or against any one of them separately.

Joint Cargo Committee

A committee formed by the Lloyds and Company Underwriters to deliberate on issues concerning cargo insurance and to make recommendations for uniform implementation.

Joint cargo Survey

A joint survey attended by the surveyor of the carrier and the surveyor appointed by the cargo owner/cargo underwriter in case of a loss to cargo.

Joint Hull committee

A committee formed by the Lloyds and Company underwriters to deliberate on issues concerning Marine Hull Insurance and to make recommendations on premium rates policy terms and conditions for uniform implementation.

Joint Hull Survey

A joint survey conducted by the surveyor appointed by the insured and the surveyor appointed by the insurer in case of an accident to the insured vessel resulting in a claim under the policy. Surveyor from the classification society may also participate in the survey in case the class of the vessel is to be certified after repairs to the vessel.

Joint Hull Understandings

Understandings reached among the Hull Underwriters in the London Market with a view ensure uniformity of approach on principles and practices concerning Hull Insurance


Determination of a court of competent jurisdiction upon matters submitted to it

Judgement by Default

Judgement delivered in a court in the absence of one of the parties to the litigation, either plaintiff or defendant.

Judgment Rating

Rate-making method for which each exposure is individually evaluated and the rate is determined largely by the underwriter's judgment.



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.


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.


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")


Listed Companies

Companies whose shares are listed for trading in Stock Exchanges. The respective Stock Exchange in which the shares are listed prescribes Regulations for these Companies regarding publication of their accounts and disclosure of various information and details. Hence the listed Companies may be said to be more transparent.

Losses discovered or claims made basis

The term, In relation to excess of loss reinsurance treaties, means that all losses discovered, reported or made during the period of the treaty irrespective of the inception date of the original policy or policies or of their occurrence. This type of cover is sometimes used when it is difficult to pinpoint an exact date of occurrence, e.g. Fidelity Guarantee Policies

Losses occurring basis

In relation to excess of loss reinsurance treaties, the cover provided under the arrangement being on losses occurring basis, meaning that all losses occurring during the period of the treaty irrespective of the inception date of the original policy or policies (issued by the reinsured to the original insured) are covered by the treaty.


"Largest Claims Reinsurances" is a method more suitable to Liability Reinsurances where a statistical survey of large losses is taken on last five years and a prescribed limit of largest loss is fixed so that reinsures are made liable to pay only those losses which cross that limit.

Label Clause

A clause significant to Marine Cargo Insurance. In respect of canned or similar type of goods which are labelled for product identification purposes, where such labels will be damaged by contact with water or other cargo, insurer’s liability will be restricted to the cost of re-packing and re-labelling only as per this clause.


The period that has elapsed between when claims actually occurred and when actually paid

Landed but Missing

Situation where an import or export cargo would be lost after landing at the destination port, because of theft, over issue or wrong carriage to some other place. In all such cases Port Trust Authorities would, after a search, issue a certificate known as Landed but Missing Certificate or C certificate.

Landing Remarks

Remarks made by the dock authorities in their record, showing marks & nos., weights, condition etc. of the goods landed. Insurers would require an extract of this record in respect of a claim for loss or damage to the insured cargo as an evidence for the stage at which the loss to cargo could have taken place.

Lapsed Policy

An insurance cover which has come to a close earlier to the original date of expiry as stated in the policy, because of non-payment of premium by the insured. As regards non-life insurance this would arise only in respect of Marine Hull policies or other policies issued for periods greater than one year where the facility of instalment premium payment is extended. When the insured fails to pay the instalment on or before the due date, the policy will lapse on the due date.


The unlawful taking, carrying, leading or riding away of another person's property

Large Losses Information

Information on large losses is provided to reinsures for the purpose of reviewing the performance of a treaty, be it proportional treaty or excess of loss.

In relation to a proportional treaty, a loss is called a "large loss" when it exceeds the "Cash Loss Limit" provided in the treaty wordings.

In relation to an excess of loss reinsurance, a loss is called a "large loss" when it exceeds 50% of the underlying limit

Latent Defect

Term used to refer to any hidden flaw or defect in the structure of the ship or machinery which is not readily discoverable by a competent person using reasonable skill in an ordinary inspection. Any loss/damage caused by a latent defect is recoverable under a Marine Hull Insurance Policy which provides coverage as per I.T.C. (HULLS) or I.V.C. (HULLS)

Law of Large Numbers

Concept that the greater the number of exposures, the more closely will be, the actual results to the expected results and greater the credibility of predictions. This law forms the basis for arriving at the statistical expectation of loss based on which the insurance premium will be fixed for different risks.

Lawful Adventure

An implied warranty in respect of marine insurance contracts to the effect that the adventure must be legal.

Lay-up Warranty

The hull policies covering minor vessels such as fishing vessels and sailing vessels carry a "Lay-up Warranty" providing that the insured vessel be laid up out of commission during a specified period viz. monsoon or winter months. The vessels may be laid up afloat, or on mud or the "hard".

Layout Plan

A representation of the shape of horizontal section of a building. The shape of the building at the ground floor is always taken and by adding further details, the plan is built-up so as to incorporate all features of all storeys and also of the roof. Plans contain clear and concise form of important matters which cannot be covered by an inspection report.

Lay-Up Returns

- In Marine Hull Insurance, Scale of Premium Refund agreed by the International Marine Insurance Market when the insured vessel should be laid up during the period of insurance. As the risk to the insurer during lay-up period would be very less when compared to the risk during navigation of the vessel, return of premium is allowed by the insurer for the laid-up period. This return of premium is subject to certain conditions imposed by the insurer.

-Motor Insurance, if vehicle is laid up in the garage, risks covered under a Motor Comprehensive Insurance Policy are restricted to fire, burglary and theft. Hence part of premium becomes refundable as per the provisions in the All India Motor Tariff.

Lead Insurer

The insurer among the co-insurers in respect of any risk jointly insured by them, who has greater share than others. Leader or the lead insurer will deal with the insured on all matters connected with the insurance coverage including full premium collection, document issue, other clients' servicing matters including settlement of claim for the full assessed loss etc. It is customary for all co-insurers to issue to the leader letter of authority to facilitate the leader to carry out all the above functions on their behalf which would be binding on them. Normally Ex-gratia settlement of claims do not come under this arrangement. Periodical settlements will be effected as between the leader and the co-insurers in connection with release of co-insurer's share of premium and collection of their share of losses.

Leader/Leading Reinsurer

Generally an Excess of Loss Reinsurance Treaty Terms are negotiated with a leader who quotes rates and other terms and supports with a lead share. A reputable leader's lead makes it easy to complete placement with good securities. Generally other reinsurers agree to follow the leader.

On a proportional treaty generally there is no leader but there may be a leading reinsurer with a large share.

Leakage from Automatic Sprinkler Installations

Accidental discharge or leakage of water from an automatic sprinkler installation arising out of damage to the sprinkler head by impact from some object or heat from some source other than fire causing sprinkler head to operate. Loss/damage to an insured property due to such leakage of water is covered under the standard fire and special perils policy.


Contract whereby the owner of some fixed assets like building, equipment, furniture etc. allows the usage by the contracting party of such fixed assets for a specified period of time in consideration of certain payment of amount in the form of rent by the said contracting party. The owner of the leased property is called the Lessor and the user the Lessee.

Legal Liability

Financial Liability towards third parties imposed under Civil Law.

Legal Liability Insurance Policy

Insurance Coverage to provide indemnity to the insured in respect of financial consequences of legal liability. Wherever liability arises under Civil Law, compensation (damages) becomes payable. Besides there may be legal costs awarded against the insured and also legal costs of defence of the claim incurred which are also reimbursed under the policy.

Legal Opinion

Opinion given by a lawyer in respect of an issue, describing what is legal or lawful.

Legality of the contract

One of the essential elements for a contract to be legally valid. Applicable to insurance contracts also. The subject matter of the contract must be legal.


Individual or firm that extends money to a borrower with an undertaking by the latter that such money shall be repaid, usually with interest. Lenders extending loans against assets, whether moveable or immovable have an insurable interest on such assets.


A person to whom a lease is granted. A tenant under a lease

Letter of Credit

A document authorising payment of an agreed sum to a named person at the risk of the issuer. If expressed as irrecoverable the authority cannot be withdrawn.

Letter of Indemnity

Where original policy has been lost or misplaced by the claimant, a letter of indemnity is obtained from him by the insurer to the effect that in case, subsequently, some other person presents his claim on the insurer on the support of the original policy, he will reimburse the claim amount paid to him and also hold the insurer harmless for effecting settlement with him without production of the original policy. This is relevant only in respect a Marine Policy in view of its freely assignable nature.

Letter of Transfer (G.A)

In relation to General Average, refers to a letter obtained from the insured by the insurer after paying on behalf of the insured the general average deposit due to be paid by the insured in connection with a general average. On the strength of this letter the insurer can receive from the ship-owner any excess amount of deposit over the actual contribution amount.


Any legally enforceable obligation.

Liability Insurance

Insurance designed to protect the policyholder against financial loss due to liability resulting from injuries to other persons (Third Party) or damage to their property.

Liability Limits

The sum or sums stipulated in an insurance contract up to which an insurance company is liable to meet the claims made by the insured.

Liability of carrier (Carriage by Sea)

Under the contract of affreightment, the carrier is obliged to supply a vessel which is both sea-worthy and cargo-worthy. Besides providing a competent crew to man the ship, he must carry, care for and deliver the goods at destination in the same good order and condition in which they were delivered to him. If on account of failure on the part of the carrier to discharge his duties, the cargo suffers any loss or damage, he is liable to make good the loss to the cargo owner. The ship owner's liability towards cargo is limited by statute. The carriers' liability to cargo is insured through P & I Clubs and not in the ordinary marine insurance market.


Legal authority given to a company, agent, broker or a consultant to transact insurance business within the framework of applicable laws and/or acts and/or regulations that are in force.

License Fee

Sum paid by an insurance company or other firms or individuals as fixed by the Regulatory Authority for transacting business as per the authority granted by the License.


A legal right which one possesses over the property of another until the latter has satisfied a liability towards the former. (Ex. A carrier has a lien on the cargo carried by him until the freight for carriage has been paid)

Lift (Third Party Liability) Insurance

An Insurance Policy designed for owners of passenger lifts in buildings to take of their liabilities arising out of the use and operation of the lifts. Policy provides indemnity for the legal liability of the insured for payment of compensation to third parties for loss of life or bodily injury or for the damage to the third party property. Legal expenses incurred by the insured with the consent of the insurer for defending any legal action against the former by such third parties will also be payable under the policy. The policy will contain two limits one for any one accident and another for all the claims during the period of the policy which will represent the insurer's maximum liability.

Light Motor Vehicle (LMV)

A transport vehicle or omnibus, the gross vehicle weight (GVW) of either of which or a motor car or a tractor or a toad roller, the unladen weight of any of which does not exceed 7,500 Kgs.


A flash of light in the sky caused by the discharge of atmospheric electricity from one cloud to another or between the cloud and the earth. Lightning may cause crevices in a building or fire damages. Lightning is a peril covered under the term "Fire" in relation to the Standard Fire and Special Perils Policy.

Limit for Any One Loss

Refers to amount of maximum liability of the insurer under the policy for any one loss or series of losses arising out of one event

Limit of Liability

This is the monetary limit to which the insurer/ reinsurer is liable for any one risk. When It relates to reinsurance it is expressed either on a sum insured basis or on P.M.L.(Probable Maximum Loss) basis.

Limit of Loss with Reinstatement Provision

In an Excess of Loss Reinsurance Treaty there is limitation to aggregate losses payable during the cover period by the Reinstatement Provision. If such limit is exhausted before the expiry date of the cover the XL Cover will become dead before the expiry date.

Limit per accident

Maximum liability of the insurer in respect of all claims arising out of a single accident.

Limit per bottom

This represents the maximum limit up to which any single shipment will be covered under the open cover by the insurer. 'Limit per bottom' clause will appear in all open covers covering imports or exports.


One line is equal to the ceding company’s retention. A proportional treaty may have a total capacity expressed as x lines and a reinsurer's share may be y lines

Line of Business

The general classification of business as utilized in the insurance industry, i.e., fire, allied lines, homeowners, etc.


A voluntary unincorporated association of individuals organized for the purpose of writing insurance; normally refers to Lloyd's of London, a group of individual underwriters and syndicates that underwrite insurance risks severally, using facilities maintained by the Lloyd's of London Corporation


To add charges to an insurance premium

Loss of Profits

A synonym for business interruption insurance


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.


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.


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.


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.


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.


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.


Named Insured

Individual, firm, industry or an organization, in whose favour and specific name the policy is issued.

Named Perils policy

Policy in which the perils against which the coverage is granted is listed. Insurer will be liable for losses only when they are caused by any of the listed perils.

Nationality of Vessel

Nationality of the vessel is important to the insurer particularly if the vessel sails under a "Flag of Convenience", as he would not like extend cover for cargo shipped by such vessels and insert a warranty to that in the policy or the open cover. (See "flag of Convenience")

Natural Gas

Primarily Methane and also some Ethane with small quantities of entrained heavier fractions, such as Propane, Butane, etc. These and others, are readily condensed from the Natural Gas flow and are known as Natural Gas Liquids, as distinct from Liquid Natural Gas (L.N.G.), which is Methane/Ethane refrigerated under pressure to the liquid state.

Natural Losses

Loss or damage caused by vagaries of nature, such as storm, hurricane, floods, lightning, earthquake etc.

Natural Resources

Actual and potential forms of wealth supplied by nature, such as coal, oil, wood, water power and arable land.

Navigational Limits

Limits prescribed by the Port Authorities and the Director General of Shipping with regard to the area of operation of the ships, which depend upon the size, nature and type of the vessels. Insurance Policies also fix territorial limits for operation of the vessel depending upon its use

NCDRC, National Consumer Disputes Redressal Commission (N.C.D.R.C.):

Complaint can be filed in N.C.D.R.C., by an aggrieved insured against an insurer where the value of the claim exceeds Rs.20,00,000/- Territorial Jurisdiction of the Commission is whole of India. Appeals against the orders of any of the State Consumer Disputes Redressal Commission also can be filed before the NCDRC


Failure to use the care that a reasonable and prudent person would have used under the same or similar circumstances.

Negotiable Instrument

A document of title to property that may be transferred from one person to another in the course of business

Negotiated Settlement

Settlement of Claim reached on a compromise basis in cases where there is dispute as regards liability or the quantum of loss payable but that it is felt that a compromised disposal is desirable on mutual interest.

Neon Sign Insurance

Insurance Coverage in respect of loss or damage to the neon sign installation by

(a) Accidental external means and

(b) Fire, lightning, external explosion and theft.

Insured's liability to third parties arising out of an accidental damage to the insured neon sign can also be covered under the policy.

Net Loss

Residual Loss to the insured after taking into account realisation from salvage and/or recoveries from third parties if any, but that such salvage and/or third party recoveries shall be taken net of any expenses incurred towards realisation of such recoveries.

Net Premium

The portion of the premium which is designed to cover losses/ benefits payable under the policy, but not the various expenses. The portion of the premium retained by the office after deduction of expenses of management inclusive of the agent's commission.

Net Premium Written

Total premium written by a ceding company minus premium ceded to the reinsurer.

Net profit

The Net Trading Profit excluding capital receipts and accretions and outlay chargeable to capital. It is arrived at after making provisions for all standing charges but prior to deduction of tax. The Loss of Profit Policy provides cover for the loss of Net Profit and the insured standing charges during the period of interruption to production arising out of a damage in the insured premises by an insured peril.

Net Retained Line Clause

A clause which is applicable to the excess of loss reinsurance cover, which refers to the protection offered by the cover only to the retained net line account of the reinsured. The net account of the reinsured may include the following:

a) Normal Any One Risk Retention as per the reinsurance programme

b) Unplaced share of the proportional treaty after retention.

As per the net retained line clause the excess of loss cover will exclude the second item.

Net Retained Lines

The term, in relation to excess of loss reinsurance treaties refers to the provision that the treaty will only protect that portion of the insurance which the reinsured retains to his net account. The treaty will not protect him if one of the proportional reinsurer under a proportional treaty does not settle his share of loss under the treaty and as a result it reflects back as a liability to be borne by the reinsured.

Net Retention

Extent of capacity which an insurance company puts forth to retain the risk to its own account without any recourse to reinsurance.

Net tonnage

Passenger and/or cargo accommodation expressed in a cubic measurement based on 100 cubic feet equals one net registered ton.

Net Worth of the Company.

This indicates the excess of Assets over the Liabilities of the Company, which in turn mean, the Sum of the Equity and Preference Capital and Free Reserves like General Reserve of the Company.

New Business Clause

A special clause added to the specification in a loss of profit (Consequential Loss) policy. When insurance is arranged for an entirely new business where no past performance figures exist. This clause amends the definitions of rate of gross profit, annual turnover and standard turnover to expand the results from the commencement of the business to the date of damage to give proportionate figures for a complete twelve months. (See 'Gross Profit', 'Annual Turnover', 'Standard Turnover' and 'Specification')

No Cession without Retention

It is a condition in reinsurance contracts that the ceding company has to retain a portion of the risk and reinsure only the balance. Contract does not permit reinsurance for 100% of the risk.

This condition is mainly to safeguard reinsurers' interest to ensure that bad risks are not passed on to them fully.

No Claim Bonus

A reduction as a percentage in the manual or the prospectus premium at the time of renewal of the policy based on favourable claims experience in the previous year/s policy/ies for the same insured property against the same insured perils.

No Claim Refund

Portion of premium agreed under the policy to be refunded to the insured in the event of no claim being reported or paid during the entire policy period. It is customary for the insurance companies to link this with the renewal of the policy, to ensure renewal with them without fail.

No Cure, No Pay

1. A term used in connection with salvage operations of a vessel or cargo in distress. Salvage Award payable to the salvor will be on 'No cure No pay' basis in the sense he is entitled for the award only if and when the property is saved.

2. Recovery Agents pursuing recovery from the carriers, will handle the assignment given to them by the insurers on 'No cure No pay' basis in the sense that they will claim fee only when they recover some amount from the carriers.

No fault liability

Means that the claimant is not required to prove that the death, injury or damage was due to any wrongful act, neglect or default of any person. The relief provided under the following acts come under "No Fault Liability"

1. Public Liability Insurance Act.

2. Motor Vehicle Act in connection with Road Accident Victims.

3. Workmen’s compensation act

No Known or Reported Loss

This condition is sometimes stipulated by insurers/reinsurers who base their acceptance of a proposal for insurance/reinsurance subject to no known or reported loss to subject matter proposed for insurance/reinsurance as on the date of their acceptance.


Person, firm or institution whose name is mentioned in the accident insurance policies to be the recipient of the policy benefits in the event of death of the insured person arising out of an accident

Non - Performing Assets

This refers to the Investments which are classified as Non-performing Assets (NPA) as per the accounting policy of the Company. RBI gives detailed guidelines as to how and when an investment has to be treated as NPA which is with reference to the non-payment of the Loan or Debenture when it is due or non-payment of the interest on the Loan or Debenture when due. The amount to be provided for in these cases is mentioned in the RBI guidelines and they are applicable to Banks and Financial Institutions. Insurance Companies may choose to follow these guidelines and provide for the same in the books of accounts.

Non Fare paying passengers

Provision in Motor Insurance Commercial Vehicles Policy to cover, in respect of commercial vehicles which are not authorised to carry fare paying passengers, persons connected with the specific journey allowed to travel on payment of additional premium

Non Hazardous

Refers to the physical/chemical properties of a matter of whatever state which present no undue exposure to the risk in question. Normally the premium rates will be the lowest for non-hazardous goods.

Non-assignable Policy

Policy which cannot be assigned by the insured to another. Normally property and liability policies are not assignable.

Non-Concurrent Policies

Two or more polices which cover part only of the properties covered by other policies or which include properties not covered by others. However some property will be common to all.



Process by which property becomes useless, not because of physical deterioration, but because of changes outside the property, notably scientific or technological advances.


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.


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.


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


Person who receives an offer from another. The offeree may accept or reject the offer.


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.



Policy Proof of Interest. Under an ordinary marine policy the assured has to prove his insurable interest at the time of loss to substantiate a claim. A PPI policy dispenses with the need for the assured to prove his interest at the time of loss. The mere production of the policy is deemed sufficient proof of interest. There are certain insurable interests which, although they exist, are difficult to be established or extent of which is difficult to arrive at. Increased Value of the cargo is an example of the former and Anticipated Freight is an example for the latter.


In general insurance, comprehensive insurance scheme, in favour of an individual or an enterprise or an industry covering assets, personnel, interests and liabilities against a bundle of perils.

P.A. Flight Coupons

Passenger's Flight Insurance Coupon covers death and/or permanent disability arising out of a bodily injury caused by violent, accidental, external and visible means whilst in or entering into or descending from any aircraft owned and/or operated by a regular airline over a schedule route by which the insured is travelling as a fare paying passenger during the flights specified. Rate of premium is Rs.5/- per Rs.50,000/- for a flight of not more than 24hrs duration.

Package Policy

A combination of two or more individual coverage into a single policy. A Householders Comprehensive Insurance Policy, for example, is a package combining property, personnel and liability coverage for the householder.

Packing List

Statement furnishing details of the contents of a package or a container. This document is required by the insurer in case of a claim for shortage of contents in the package caused during transportation and preferred under the relevant cargo insurance policy. Packing List helps for a comparison of the contents packed with the contents received at destination.

Paid Losses

Total amount of all the losses paid by an insurance company in a given period

Pain and Suffering

Refers to the suffering attributable to the injury sustained by the person in an accident and to any consequential surgical operation. This is one of the heads of damages allowed in relation to any motor third party insurance claim. Past and future suffering, pain, duration and its severity are taken into account. Damages are given both for mental and physical pain and suffering.

Pair & Set Clause

Where the value of certain articles such as a pair of diamond earrings depends on their continuance as a pair or set, the value is drastically diminished if one of the pair or set is damaged or destroyed. Naturally, the insured would prefer to abandon the remaining earring to the underwriter and to claim a total loss. By inserting Pair & Set Clause, the insurer limits his liability to the insured value of the damaged part or lost object.


Assembly of one or more packages on a pallet base and properly secured to it.


This is a special packing method where bundles, bales, cases etc. are placed in wooden platforms and then securely tied. Pallets are then lifted by fork-lifts or cranes and placed into the holds of the vessels.

Partial Disability

The result of an illness or injury which prevents an insured from performing on or more of the functions of his/her regular job

Partial Loss

A loss under an insurance policy which does not either; (1) completely destroy or render worthless the insured property; or (2) exhaust the insurance applying thereto.

Particular Average

Accidental partial loss of the subject matter insured proximately caused by an insured peril. In a freight at risk policy the term may be applied to a claim for loss of freight following particular average loss of goods.


A term used in the Marine Insurance Act (1906) to denote a hazard. The principle of proximate cause is applied to an insured peril to determine whether or not a loss is recoverable. In modern practice the term "risk" often replaces "peril".

Physical Damage

Damage to or loss of an automobile resulting from a named peril

Physical Hazard

A condition of the subject of insurance which creates or increases the chance of loss, such as structural defects, occupancy, or similar conditions


Petty theft, especially theft of articles in less than package lots.

Policies Issued Basis

When excess of loss reinsurance treaties are concluded on Policies issued basis, the treaty will only cover those policies that have been issued or renewed at dates falling within the period of the treaty.


The written statement of a contract effecting insurance, or certificates thereof, by whatever name called and including all causes, riders, endorsements and papers attached thereto and made part thereof.


The person (or persons) whose risk of financial loss from an insured peril is protected by the policy.

Policyholder's Funds

Monies set aside by insurers to cover outstanding liabilities to Policyholders. Also known as technical reserves

Policyholder's Surplus

Amount over and above liabilities available for an insurer to meet future obligations to its policyholders

Policy Period

The period during which the policy contract affords protection.

Policy Term

The period for which an insurance policy provides coverage


A risk sharing mechanism in which the members of a group agree to be collectively responsible for losses

Pre-Existing Conditions

A physical condition of an insured person which existed prior to the issuance of the policy.


The particular location of a property or a portion thereof as designated in a policy.


The payment for an insurance policy, usually paid periodically (annually, semi-annually, quarterly, or monthly).

Premium Notice

Notice of a premium due, sent out by the company or one of its agencies to an insured. Synonym for “Renewal Notice".


The applicant for, or subject of, insurance; the one from whom an agent derives his or her authority

Prior Damage

Pre-existing damage that occurred prior to the loss in question.


Cancellation of an insurance contract by the insurance company, allowing a policyholder a share of the premium relating to the remainder of the time under the contract that bears to the total contract premium.

Pro Rata Cancellation

Cancellation with a return of premium charged for the period of time the policy was in force equal to the ratio of the total premium to the total policy period

Products Liability Insurance

Provides protection against claims arising out of the use, handling or consumption of a product.

Professional Liability Insurance

Liability insurance to indemnify professionals, doctors, lawyers, architects, etc., for the loss or expense resulting from claim on account of bodily injuries because of any malpractice, error or mistake committed or alleged to have been committed by the insured in his profession.

Proof of Loss

A statement made to the insurance company under oath setting out the basis of an insured's claim under the insurance policy.

Property Damage (Liability) Insurance

Protection against liability for damage to the property of another not in the care, custody and control of the insured, as distinguished from liability for bodily injury.

Property Insurance

Insurance which indemnifies a person with an interest in physical property for its loss or the loss of its income-producing ability.


A person interested in taking out insurance has to make an offer by means of a proposal. This is an application for the cover required, or for obtaining quotations of the premium chargeable

Proposal Form

It is a form which is to be completed for securing an insurance policy


Proposer is a person who proposes the insurance policy

PROSCRIPTION: Outside of the time period in which a legal action can be commenced.


A form, which is often part of the proposal form, giving details of the cover available with particulars of extra benefits and rebates

Protection and Indemnity (P & I) Insurance

Liability insurance coverage in an ocean marine policy

Provision for Unexpired Risks

Amount set aside on the balance sheet in addition to unearned premiums with respect to risks to be borne by the insurance undertaking after the end of the financial year, in order to pro-vide for all claims and expenses in connection with insurance contracts in force in excess of the related unearned premiums and any premiums receivable on those contracts


The terms or conditions of an insurance policy

Proximate Cause: The immediate and effective cause of loss or damage. It is an unbroken chain of cause and effect between the occurrence of an insured peril or a negligent act and resulting injury or damage.

Public Liability/Third Party Liability

The insured's liability at law (excluding liability to an employee arising out of employer/employee relationship) to pay compensation for death, injury or illness sustained by any person or damage to property caused by explosion or collapse of boiler and pressure plant or use of lilting and handling plant

Punitive Damages

Damages awarded separately and in addition to the compensatory damages, usually on account of malicious or wanton misconduct, to serve as a punishment for the wrongdoer and possibly as a deterrent to others

Pure Risk

A condition in which there is the possibility of loss or no loss only


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.


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


R.C. Book

Registration Certificate of a vehicle confirming ownership of the vehicle. This document indicates insurable interest on the part of the proposer of insurance. This is verified by the surveyor/insurer in case of a road accident claim pertaining to the insured vehicle.

R.I.V. Policy

Reinstatement Value Policy - A standard fire and special perils policy with reinstatement value clause attached where by Building, Plant and machinery or other fixed assets are covered for their reinstatement or replacement cost enabling the insured to be indemnified in the event of loss for the cost of replacing or reinstating with property of same kind or type when new as on the date of loss. The principle of indemnity is slightly modified in the sense that the insured will be compensated for 'new' in the place of 'old'.

Rateable proportion of Loss

The term relates to treatment of a claim for a loss which is insured under more than one policy. In such a situation settlement will be made each insurer for only his share of the loss, which will be that proportion that the sum insured under his policy will bear to the cumulative sum insured under all the policies involved.


In energy risks, the closing and sealing component on a blowout preventer

Ram Blowout Preventer

In energy risks, a blowout preventer that uses rams to seal off pressure on a hole that is with or without pipe. It is also called a ram preventer.

Rate of Exchange

Price of one currency in terms of another.

Rate of Gross Profit

Gross Profit expressed as a percentage of the turnover. In relation to Consequential Loss Policy, refers to the rate of gross profit earned on the turnover during the financial year immediately before the date of loss suitably adjusted to provide for trend of the business.

Rate of Premium

The pricing factor upon which the premium payable for a particular insurance cover will be based

Rate on GNPI

In relation to excess of loss reinsurance, refers to the premium for the excess of loss cover expressed as a percentage of the Gross Net Premium Income. (See "Gross net Premium Income")

Rate on Line

In relation to excess of loss reinsurance, refers to the premium for the excess of loss cover expressed as a percentage of the limit of the excess of loss cover for any one event of loss.

Rate per Mille

Rate of premium calculated per thousand of the Sum Insured


The payment of the expenses actually incurred as a result of an accident or sickness, but not to exceed any amount specified in the policy


(1) A contract of indemnity against liability by which the insurance company procures another insurance to insure against loss or liability by reason of the original insurance; (2) Insurance by one insurance company of all or part of a risk accepted by it with another insurance company which agrees to reimburse the insurance company for the portion of the claim insured.


Continuance of coverage under a policy beyond its original term by the insurer's acceptance of the premium for a new policy term

Renewal Notice

The notice sent to the policyholder to remind him that an insurance is due for renewal by insurers

Renewal Receipt

The written evidence that a renewal premium has been paid

Repatriation Expenses

(Under Overseas Medi-claim Policy) Expenses incurred to travel back to home country following sickness abroad

Replacement Clause

A clause limiting Underwriter's liability for damage to machinery cargo.

Replacement Cost

The cash value representing what it would cost to replace the specific property without deduction for depreciation.


Termination of an insurance contract by the insurer on the grounds of material misstatement on the application for insurance


Liability set up for particular purposes


An early form of marine insurance on cargo; similar to bottomry, the equivalent on hulls


Reinstatement, as the amount of coverage after a loss


The act of retaining an exposure to loss: also that part of the exposure that is retained

Retroactive Date

Date on a "claims made" liability policy which triggers the beginning of insurance coverage. A retroactive date is not required. If one is shown on a policy, any claim made during the policy period will not be covered if the loss occurred before the retroactive date.


An endorsement to an insurance policy that modifies clauses and provisions of the policy, adding or excluding coverage(s).


A fortuity. A term used to designate an insured of a peril insured against. It does not embrace inevitable loss. The term is used to define causes of loss covered by a policy.


The unlawful taking of property by violence or threat of violence

Running Down Clause

Additional coverage, which can be added to, an Ocean Marine Hull policy to provide protection for damage to another ship caused by collision.



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.


Art of persuading people to purchase a product or to avail a service.


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.


(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.


The Underwriters subscribing a risk. The Insurers.


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.


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.


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.


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


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



State of cargo being soiled by atmospheric conditions arising for example from cargo in close proximity giving odours such as oranges tainting tea.

Tally Sheet

Document prepared by the port trust officials recording the description of the cargo and the number of packages as the cargo is landed from a vessel. The document will also record wherever a package is landed not in apparently sound condition. This is known as "landing tally" and requisitioned by the insurer in case of an import claim under a marine insurance policy to verify whether the package which contained the item claimed for landed in a damaged condition thereby indicating that the loss should have taken place in the custody of the carrier.

Tank Containers

Tank containers usually of stainless steel and of size 8 x 8 x 10 and capacity 4000 liters are used to carry dangerous, corrosive, inflammable and toxic chemical substances. These tank containers carry the advantages of easier handling, completely adaptable to integrated transport systems, more effective for volume loading and less expensive than using drums.

Tank Farm

An area at a refinery, terminal or storage depot dedicated to storage tanks and their safety requirements for surrounding space and spillage containment devices


Liquid Bulk Cargo Carriers, which are strongly built vessels to carry bulk liquid cargo like crude oil, petrol, molasses etc.

The speed of the vessel will be 10 to 15 knots. They play on fixed routes.

Collision damage will result in huge losses. Also the risk of fire and explosion during discharge of cargo is more. There are possibilities of pollution risk also.


Weight of packing in a consignment or unlade weight in a vehicle or container.

Tariff Rate

Rate fixed by the Tariff Advisory Committee in respect of specific property / properties and against specific peril/perils, which will have to be scrupulously followed by all insurers. In almost all cases the rate fixed by the tariff committee is the minimum to be charged for a given situation, leaving it to the individual insurer to charge more if a specific proposal warrants.

Tax Token

Token issued by RTO for having paid required tax for the vehicle. Strictly speaking, payment or non-payment of tax does not vitiate insurance contract and liability under the policy does not get prejudiced.

Taxying (Aircraft)

Deemed to include all movement of the aircraft under its own power other than for the purpose of flight. Taxying shall not be deemed to cease merely by reason of the temporary halting of the aircraft in the course of taxying from one point to another

Tearing apart on account of centrifugal forces

The term refers to insured machine/equipment/apparatus splitting into factions due to the force tending to pull it outward when it is rotating rapidly around the centre. This contingency is not covered under the explosion coverage part of a standard fire and special perils policy.

Television Insurance

Insurance Cover for T.V. apparatus and antenna as also to VCR against Fire and allied perils, Riot and Strike, any other accidental damage by external means, mechanical and electrical breakdown, burglary, housebreaking and theft. Cover is also provided against third party liability of the insured or loss to his own surrounding property arising out accidents caused by or through the insured item. Differential rates of premium are applied by the insurer depending upon whether the equipment is for personal or commercial use and also if let on hire.

Tenants Liability

Cover for damage to rented buildings

Term Insurance

Life insurance issued for a stated temporary period of time.


The unlawful taking of property of another: the term includes such crimes as burglary, larceny and robbery.

Third Party

Someone other than the insured and insurance company

Third Party Claim

A demand made by a person against a policyholder and any payment that will be made by that company

Third Party Liability

Liability incurred by the insured to another party but excluding contractual liability


A whirling wind over land, accompanied by a funnel-shaped cloud. It is usually very violent and destructive in a narrow path, often for many miles


A civil wrong, other than a breach of contract, for which a court of law will afford legal relied

Total Disability

An illness or injury which prevents an insured person from continuously performing every duty pertaining to his/ her occupation or engaging in any other type of work

Total Loss

This can be actual total loss or constructive total loss, where the cost of damage repair exceeds the value of the property insured.

Transit Clause

A clause in the Institute Cargo Clauses, specifying the attachment and termination of cover.


A reinsurance contract under which the reinsured company agrees to cede and the reinsurer agrees to assume risks of a particular class or classes of business


The money earned for goods supplied or services rendered in the course of the business at the premises specified in the policy


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.


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.


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.


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.


Valid Contract

A contract which can be enforced in a court of law.

Valuation Clause

A clause which appears in the Institute Time Clauses and other hull clauses which provides that the insured value is to be taken as the repaired value for constructive total loss purposes and nothing in respect of breakup value is to be taken into account.


The worth of the property to be insured or of that which has been lost or damaged.

Valued policy

Contracts of Insurance where the sum insured in respect of the insured property is deemed to be the actual value of the property throughout the currency of insurance. Claims in respect of total loss are settled without any adjustment which may otherwise arise on such considerations as adequacy of the sum insured, market value, etc.

Marine Insurance Policies both for Cargo and Hull are all "Valued Policies". As regards policies like Fire and Burglary Policies this facility is extended in respect of valuables, paintings, pictures, curios, antiques and other works of art.

Variable Expenses

Cost or expenses which vary in proportion to the quantum of production or the volume of turnover. Variable expenses are eliminated while computing the gross profit of a business for the purpose of fixing the sum insured under a business interruption or the consequential loss policy.

Variable Quota Share Treaty

In a Quota Share Treaty there may be retention with maximum say 20%. This would mean that on certain risks retention can be lower than this percentage. This is termed as variable quota share. There will be corresponding variation with regard to maximum reinsurance in respect those risks.

Vehicles Laid Up

Refers to a comprehensively insured motor vehicle being laid up in garage and not in use. Subject to a notice from the insured in advance of the period during which the vehicle will be laid up, insurer will restrict the cover during the laid up period to Fire, Burglary and Theft Risks only. The insured consequently will get either of the following benefits

1. A portion of the premium already collected by the insurer will be given to the credit of the insured at the time of renewal of the policy or

2. The existing policy will be extended by a period equivalent to the laid up period by charging an extra premium which will represent the premium for the restricted cover during the laid up period.

Vehicles subject to Hypothecation Agreement

It is not permissible to issue policies in the joint names of Pledge and Registered Owner of the vehicle. Policies must be issued in the name of Registered Owner of the vehicle and the Pledges interest protected by the use appropriate Endorsement.

Vehicles subject to Lease Agreement

It is not permissible to issue policies in the joint names of Lessee and Lessor. Policies must be issued in the name of Lessee and the Lessors interest protected by the use of appropriate Endorsement.

Veterinary Health Certificate

Certificate issued by a qualified Veterinarian on the health and value of the animal. This is obtained at the time of insurance so that healthy animals are only insured and for their real value.

Void Policy

One which is inadmissible as evidence in a court of law (e.g. P.P.I. policy).

Voidable Contract

A contract, which is valid until it is treated as void by the aggrieved party, is a voidable contract


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.


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")


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.


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.


Year of Account basis

This term relates to an accounting methodology practiced in connection with reinsurance transactions. In this category are accounts that deal with premiums and losses in the year under review irrespective of the year of origin of the cession or of the loss.

York-Antwerp Rules

The set of rules, which has been devised as a voluntary code to maintain universal uniformity on treatment of General Average. The provisions of these rules form the basis for General Average adjustments. There is specific incorporation in all the bills of Ladings agreeing for adoption of these rules. Underwriters, world over approve these rules in connection with consideration of General Average related claims under their polices. These rules were first coded in 1890 and have undergone few amendments over the period to take care of developments that have taken place in the implementation of these rules.


Zone A

In relation to application of premium rates prescribed in the All India Motor Tariff, refers to one of two Zones of Operation of the Motor Vehicle which comprises of: Madras Region and Mumbai Region excluding "Mumbai"

Zone B

In relation to application of premium rates prescribed in the All India Motor Tariff, refers to one of two Zones of Operation of the Motor Vehicle which comprises of: Other than regions covered by Zone A, namely: Calcutta Region, Delhi Region and "Mumbai"