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ABANDONMENT: Giving up the proprietary rights in insured property to the Underwriter in exchange for payment of a constructive total loss.

ACCIDENT: A fortuitous event, unforeseen and unintended.

ACCIDENT INSURANCE: A form of health insurance against loss by bodily injury.

ACCOUNTS RECEIVABLE POLICY: An inland marine (also burglary) policy written to protect the insured from financial loss due to his inability to collect amounts owed him because of the destruction of his records.

ACT OF GOD: A flood, an earthquake or other accident or event that is without any human intervention and that could not have been prevented by reasonable care or foresight but is the result of natural causes.

ACTUAL CASH VALUE: The sum of money required to pay for damages or lost property, computed on the basis of replacement value less its depreciation by obsolescence or general wear.

(1) the insured property is completely destroyed or
(2) the Assured is irretrievably deprived of the insured property or
(3) cargo changes in character so that it is no longer the thing that was insured or
(4) a ship is posted "missing" at Lloyd's, in which case both the ship and its cargo are deemed to be an actual total loss.

ADDITIONAL INSURED: A person or firm or corporation other than the named insured on a policy or mortgage company named in a mortgagee clause, who is protected against loss by the terms of the policy or mortgage company named in the mortgage clause.

ADJUSTER: An individual representing the insurance company and acting for the company in working on agreements as to the amount of a loss and the liability of the company in same.

ADVERSE SELECTION: Selection against the insurance company; the tendency of more poor risks to buy and maintain insurance than good risks.

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

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

ASSIGNMENT: 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.

AVERAGE: A marine partial loss. This can be particular average or general average (see below).

AVERAGE CLAUSE: A clause in a marine insurance policy, whereby partial losses are subject to special conditions (e.g. a franchise or deductible is to be applied to claims).



BAILEE: A person or concern having possession of property committed in trust from the owner.

BAILEE'S CUSTOMERS POLICY: A policy providing for loss or or damages to property of bailee's customers, payable either to bailees for their account or direct to customers.

BASIC COVERAGE FORM: Any of the commercial or personal insurance property forms which provide basic coverages. These forms generally provide the most limited coverage, which is surpassed by "Broad Forms" and "Special Forms."

BASIC RATE: The manual rate, from which are taken discounts or to which are added charges to compensate for the individual circumstances of the risk.

BENEFIT OF INSURANCE CLAUSE: A clause by which the bailee of goods claims the benefit of any insurance policy effected by the cargo owner on the goods in care of the bailee. Such a clause in a contract of carriage, issued in accordance with the Carriage of Goods by Sea Act, is void at law.

BILL OF LADING: Contract of carriage and receipt for goods, issued by carrier.

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 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.

BOND: An obligation of the insurance company to protect one against financial loss caused by acts of another.

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.

BUILDINGS AND PERSONAL PROPERTY COVERAGE FORM: A commercial property coverage form designed to insure most types of commercial property (buildings or contents or both). It is the most frequently used commercial property form, and has replaced the General Property Form, Special Building Form, Special Personal Property Form, and others.

BUSINESS AUTO COVERAGE FORM: The latest commercial Automobile Insurance coverage form, which may be written as a monoline policy or as part of a commercial package. This form has largely replaced the Business Auto Policy.

BUSINESS INCOME COVERAGE FORM: A commercial property form providing coverage for "indirect losses" resulting from property damage, such as loss of business income and extra expenses incurred. It has replaced earlier Business Interruption and Extra Expense forms.

BUSINESS INTERRUPTION INSURANCE: A type of policy that pays for loss of earnings when operations are curtailed or suspended because of property loss.

BUSINESS LIABILITY: The term used to describe the liability coverages provided by the Businessowners Liability Coverage Form. It includes liability for bodily injury, property damage, personal injury, advertising injury, and fire damage.

BUSINESS PERSONAL PROPERTY: Traditionally known as "contents," this term actually refers to furniture, fixtures, equipment, machinery, merchandise, materials, and all other personal property owned by the insured and used in the insured's business.



C & F: A sale term relating to goods. Cost and Freight. The consignee makes his own insurance arrangements for the goods throughout the period of transit.

CARRIER: (1) An insurance company which "carries" the insurance. (The terms "insurance company" or "insurer" are preferred because of the possible confusion of "carrier" with transportation terminology). (2) In transportation, the trucker, air carrier, ocean steamship company or other entity which moves the goods. (See "Contract Carrier)

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.

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

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)

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 rate/s agreed in the contract. Goods carried by lower class vessels are accepted under the open cover, subject to payment of an additional premium.

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

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

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 sublines, provide very broad coverage, and two variations are available, "Occurrence," and "Claims Made," coverage.

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.

CONDITIONALLY RENEWABLE: A contract of health insurance that provides that the insured may renew the contract to a stated date or an advanced age, subject to the right of the insurance company to decline renewal only under conditions defined in the contract.

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 more than the property is worth.

CONTRACT CARRIER: A transportation company which carries the goods of only certain customers and not the public in general as in the case of a common carrier.

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

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

CONTRIBUTORY VALUE: The value on which a contribution to a general average loss or salvage award is calculated.

COUNTRY DAMAGE: Marine term referring to damage to baled or bagged goods (e.g. cotton) caused by excessive moisture from damp ground or exposure to weather, or by grit, dust or sand forced into the insured property by windstorm or inclement weather.

COVER: (1) A contract of insurance; (2) To effect insurance; (3) To include within the coverage of a contract of insurance.

COVERAGE PART: Any one of the individual commercial coverage parts that may be attached to a commercial policy.

COVERAGE TRIGGER: A mechanism that determines whether a policy covers a particular claim for loss. For example, the difference between the coverage triggers of liability "occurrence" forms and "claims made" forms is that the loss must occur during the policy period in the first case and the claim must be made during the policy period in the second case.



DEPRECIATION: Decrease in the value of property over a period of time due to use, wear, tear, and obsolescence.

DIRECT OR HELD COVERED: A condition requiring that the insured voyage be direct from one place to another. If the voyage is delayed en route or there is a deviation from the direct route the insurance cover continues subject to payment of an additional premium, but only if the Assured gives prompt notice of such delay or deviation immediately on receipt of advices, unless the policy provides otherwise.

DISCLOSURE: The duty of the Assured and his broker to tell the Underwriter every material circumstance before acceptance of the risk.

DISCOVERY PERIOD: The time allowed 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.

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 labor" charges (see Sue & Labor).



EARNED PREMIUM: That portion of a premium for which the policy protection has already been given during the now-expired portion of the policy term.

EFFECTIVE DATE: The date on which an insurance policy or bond goes into effect, and from which protection is furnished.

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.

ELIMINATION PERIOD: A loosely-used term sometimes designating the waiting period and sometimes the probationary period.

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

EMPLOYERS NON-OWNERSHIP AUTOMOBILE LIABILITY: (1) Liability arising out of the operation of an automobile not owned by the insured. This frequently results when an employee uses his own personal car in the business activities of the insured; (2) Insurance coverage for the liability exposure mentioned above.

ENDORSEMENT: A form attached to the policy bearing the language necessary to change the terms of the policy to fit special circumstances.

ENGLISH JURISDICTION CLAUSE: A condition, printed in the MAR form of policy, whereby Underwriters agree to recognize judgments only from courts convened within English jurisdiction. Subscribing Underwriters may agree to replace this clause with a foreign jurisdiction clause. Please note this is not applicable to business emanating from the United States of America which is subject to the Service of Suit Clause (USA) appearing in the Standard Conditions.

ENGLISH LAW AND PRACTICE: This clause appears in Institute clauses published for use with the MAR form or policy. It applies where a foreign jurisdiction clause attaches to the policy and requires that the foreign court shall base its decisions on English law and practice.

EXPERIENCE: The loss record of an insured, class of coverage, or of an insurance company.

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

EXTENDED COVERAGE ENDORSEMENT: A specific endorsement attached to a Standard Fire policy, usually providing coverage of windstorm, hail, explosion, riot, riot attending civil strike, aircraft, vehicular damage, smoke and civil commotion.

EXTENDED REPORTING PERIOD (ERP): A period allowed for making claims after expiration of a "claims made" liability policy. Also known as a "tail."



FAS: Incoterm meaning Free Alongside Ship"

FAC: Incoterm meaning "Free Carrier"

FOB: Incoterm meaning "Free On Board"

FPA: Free of Particular Average (see Average or Particular Average)

FIDELITY BOND: A bond which will reimburse an employer for loss up to the amount of the bond, sustained by an employer (the insured) by reason of any dishonest act of an employee (or employees) covered by the bond.

FIRE: Combustion sufficient to product a spark, flame or glow and which is hostile (as opposed to friendly - i.e. not in the place where it is intended to be as in a furnace or fireplace.)

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.

FIRST NAMES INSURED: The first named insured appearing on a commercial policy. The latest forms permit the insurer to satisfy contractual duties by giving notice to the "first" named insured rather than requiring notice to all named insureds.

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

FRANCHISE: 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.

FREIGHT: (1) Goods moved for another or, (2) The remuneration earned by a shipowner or manager for the carriage of goods; including the profit derived from carrying his own goods.



GARAGEKEEPERS LEGAL LIABILITY POLICY: Coverage for losses for which the insured is legally liable, caused by fire or explosion, theft of an entire vehicle, riot and vandalism, collision, and upset to automobiles in his care, custody and control.

GARAGE LIABILITY POLICY: A liability contract designed to provide the owner of a garage operation with the liability protection needed for the special hazards that exist there.

GENERAL AGGREGATE LIMIT: A Commercial General Liability limit that applies to all damages paid for bodily injury, property damage, personal injury, advertising injury, and medical expenses, except damages included in the products-completed operations hazard.

GENERAL AVERAGE: An Ocean Marine coverage meaning a partial loss which has resulted from the voluntary and deliberate sacrifice of some cargo for the benefit of all concerned, and which must be shared by all parties (owners of ship, cargo and freight) in proportion to their interest. For example, if 100 containers were jettisoned from a 1000 container load in order to protect the ship, the owners of the remaining 900 containers, the owners of the ship, and the owners of the freight would all contribute to offset the losses of those whose cargo was jettisoned for the benefit of the whole.

GENERAL AVERAGE CONTRIBUTION: The proportion paid or payable by a saved interest involved in a general average act.

GENERAL AVERAGE DEPOSIT: Paid by a consignee to obtain release of the cargo from the carrier following a general average act. This may be replaced by an Underwriter's guarantee.

GENERAL AVERAGE GUARANTEE: Paid by a consignee to obtain release of the cargo from the carrier following a general average act. This may be replaced by an Underwriter's guarantee.

GENERAL AVERAGE IN FULL -aka- G-A IN FULL: An agreement in a cargo insurance whereby Underwriters do not reduce a claim for general average contribution in event of underinsurance.

GENERAL EXCLUSION CLAUSE: A clause in the Institute Cargo Clauses 1982, which specifies risks that are excluded, irrespective of the risks covered elsewhere in the wording.

GLASS COVERAGE FORM: A commercial property form used to insure plate glass, lettering, frames and ornamentation. It has replaced earlier commercial glass insurance forms.

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".)



HAZARD: A specific situation that increases the probability of the occurrence of loss arising from a peril, or that may influence the extent of the loss. For example, accident, sickness, fire, flood, liability, explosion are perils. Slippery floors, unsanitary conditions, shingled roofs, congested traffic, unguarded premises, and uninspected boilers are Hazards.

HELD COVERED: A provisional acceptance of risk, subject to confirmation at a later date that the agreed cover is needed. Where applicable to an existing insurance, cover is conditional, in practice, on prompt advice to the Underwriter as soon as the Assured is aware of the circumstances to be held covered coming into effect, and a reasonable additional premium is payable if the risk held covered comes into effect.

HIRED AUTOMOBILE: Autos the insured leases, hires, rents or borrows but not autos owned by employees or members of their households.

HOLD-HARMLESS AGREEMENT: A contractual arrangement whereby one party assumes the liability inherent in a situation, thereby relieving the other party of responsibility. Such agreements are typically found in contracts like leases. A typical lease may provide that the lessee must "hold harmless' the lessor for any liability from accidents arising out of the premises.



ICC CLAUSES: (see Institute Cargo Clauses)

INDEMNIFY: To restore the victim of a loss, in whole or in part, by payment, repair or replacement.

INDEMNITY BOND: A bond which indemnifies the obligee against loss which arises as a result of failure on the part of a principal to perform.

INDEPENDENT CONTRACTOR: One who agrees to perform according to a contract and who is not an employee.

INHERENT VICE: A defect or cause of loss arising out of the nature of the goods in question.

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, jewelry, and furs can now be written under Inland Marine forms.

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 clauses cover "all risks", subject to specified exclusions. The B and C clauses cover specified "risks", subject to specified exclusions. (See actual ICC Clauses wordings via link at right)

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.



JOINT LIFE POLICY: Pays the insurance amount when the first of two or more covered persons dies.



KEY MAN (KEY EMPLOYEE) INSURANCE POLICY: An insurance policy on the life of a key employee whose death would cause the employer financial loss, owned by and payable to the employer.

KNOWN LOSS: A loss known to one or both parties when a broker and Underwriter are negotiating a placing.



LEASE: Contract whereby the owner or user of property (the lessor) agrees to let another party, (the leasee) use the property for a consideration (money or rent).

LEASEHOLD INSURANCE: Insurance for the tenant of a property leased against the loss of value of the lease or of profit fom a sub-lease through termination of the lease by fire or other peril insured against.

LIABILITY: Broadly, any legally enforceable obligation.

LIABILITY INSURANCE: That insurance that pays and renders service on behalf of an insured for loss arising out of his responsibility, due to negligence, to others imposed by law or assumed by contract.

LIABILITY LIMITS: The sum or sums beyond which a liability insurance company does not protect the insured on a liability policy.

LOCATION CLAUSE: Used in cargo open covers this limits Underwriters' liability in any one location.



MALICIOUS DAMAGE CLAUSE: A clause published by the Institute of London Underwriters for use in a cargo policy that is subject to the Institute Cargo Clauses (1982) B or C. It adds the risks of malicious acts, vandalism and sabotage to the cargo policy.

MANUAL RATES: Usually the published rate for some unit of insurance. An example is the Workers Compensation Manual where the rates shown apply to each $100 of the payroll of the insured, $100 being the unit.

MAR POLICY: A market term for the form of marine policy used by Lloyd's and the London company market. It is a basic contract form to which the conditions agreed by the insurers subscribing a marine insurance contract are attached.

MARKET VALUE CLAUSE: A provision that may be used in property damage insurance form covering some risks which obligates the insurance company, in the event of loss, to pay the established cash selling price of the destroyed or damaged stock, rather than the actual case value as provided in the Standard Fire Policy.

MINIMUM PREMIUM: The smallest premium which an insurance company will accept for writing a particular policy or bond for a designated period.

MOTOR TRUCK CARGO - OWNER'S FORM: This form insures the owner of a truck against loss to his own property while being transported. It pays for the loss or damage of cargo for the perils insured against, regardless of the legal liability.

MOTOR TRUCK CARGO - TRUCKER'S FORM: This form indemnifies the policyholder, a trucker, for loss or damage resulting from his legal liability as a carrier while transporting the property of others. I does not insure against any loss for which he is not legally liable.



NAMED INSURED: Any person, firm, or corporation, or any member thereof, specifically designated by name as insured(s) in a policy as distinguished from the others who, though unnamed, are protected under some circumstances.

NAMED PERIL POLICIES: Named Peril Policies specify what perils are insured against, as opposed to so-called all-risk policies.



OBLIGEE: Broadly, anyone in whose favor an obligation runs. This term is most frequently used in surety bonds, where it refers to the person, firm or corporation protected by the bond.

OBLIGOR: Commonly called principal; one bound by an obligation. Under a bond, strictly speaking, both the principal and the surety are obligors.

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

OCCURRENCE COVERAGE: A policy providing liability coverage only for injury or loss that occurs during the policy period, regardless of when the claim is actually made.

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.

OVERAGE: An additional premium charged on a cargo open cover declaration because the carrying vessel is outside the scope of the classification clause.



PACKAGE POLICY: An insurance policy including two or more lines or types of coverages in the same contract.

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.

PAYROLL AUDIT: An examination of the insured's payroll records by a representative of the insurance company to determine the premium due on a policy.

PERIL: 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".

PERSONAL ARTICLES FLOATER: Provides all risk coverage for valuable items such as furs, jewelry, etc. formerly insured under separate contracts.

PERSONAL EFFECTS FLOATER: An Inland Marine Policy covering worldwide except in the insured's domicile, personal effects usually carried by a tourist.

PERSONAL INJURY: Injury other than bodily injury arising out of false arrest or detention, malicious prosecution, wrongful entry or eviction, libel or slander, or violation of a person's right to privacy committed other than in the course of advertising, publishing, broadcasting, publishing, or telecasting.

PERSONAL INJURY COVERAGE: Liability insurance coverage for third party claims for damages which are other than physical such as libel, slander, false arrest, etc.

PERSONAL INJURY PROTECTION: The formal name usually given to no-fault benefits in states that have enacted mandatory or optional no-fault Automobile Insurance coverages. PIP usually includes benefits for medical expenses, loss of work income, essential services, accidental death and funeral expenses.

PERSONAL LINES: This term is used to refer to insurance for individuals and families such as private passenger automobile or homeowner insurance.

PRECERTIFICATION AUTHORIZATION: A cost containment technique which requires physicians to submit a treatment plan and an estimated bill prior to providing treatment. This allows the insurer to evaluate the appropriateness of the procedures, and lets the insured and the physician know in advance which procedures are covered and at what rates benefits will be paid.

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.

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.

PROXIMATE CAUSE: The 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.



QUALIFIED PLAN: A plan under which contributions by the employer are allowed as a deduction from taxable income, and which provides that the deposits for his employees, future benefits are not to be considered as taxable income to them in the year in which they are made.



RATING BUREAU: An organization that classifies and promulgates and in some cases compiles data and measures hazards of individual risks in terms of rates in a given territory.

RECOVERY: Amount recovered from a third party responsible for a loss on which a claim has been paid.

REIMBURSEMENT: Payment of an amount of money related to the amount of loss to or on behalf of the insured upon the occurrence of a defined loss.

REINSTATEMENT: (1) Putting a lapsed policy back in force; (2) The payment of a claim under some forms of insurance reduces the principal amount of the policy by the amount of the claim. Provision is usually made for a method of reinstating the policy to its original amount.

REINSURANCE: (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.

REPLACEMENT CLAUSE: A clause limiting Underwriters' liability for damage to machinery cargo.

REPLACEMENT COST: The cost of replacing property without deduction for depreciation.

REPORTING FORM: Fire or other direct damage insurance written under a form of policy that covers fluctuating values of stocks of merchandise, furniture and fixtures and improvements by means of periodic reports submitted to the insurance company by the insured, with an annual adjustment of premium on the average value.

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.

RISK: A fortuity. It does not embrace inevitable loss. The term is used to define causes of loss covered by a policy.



SALVAGE: (1) Property taken over by an insurance company to reduce its loss; (2) Award recoverable by salvors under maritime law.

SALVAGE CHARGES: The award due to a salvor for services rendered in saving the insured property.

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

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

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

SECURITY: The Underwriters subscribing a risk. The Insurers.

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

SUBROGATION: The legal process by which an insurance company seeks from a third party who may have caused the loss, recovery of the amount paid to the insured.

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.

SUE AND LABOR: 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 Underwriters' liability for contribution to general average or salvage, if any. Sue and labor charges are recoverable under a policy that incorporates a sue and labou 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).

SURETY: (1) A term loosely used to describe the business or suretyship or bonds. Suretyship is an arrangement whereby one party becomes answerable to a third party for the acts of neglect of a second party; (2) The party in a surety arrangement who holds himself responsible to one person for the acts of another.

SURETY BOND: A bond in which the surety agrees to answer to the obligee for the non-performance of the principal (known as the obligor).



TAIL: This term has been used to describe both the exposure that exists after expiration of a policy and the coverage that may be purchased to cover that exposure. One "occurrence" forms a claims tail may extend for years after policy expiration, and the losses may be covered. On "claims made" forms tail coverage may be purchased to extend the period for reporting covered claims beyond the normal policy period.

TO PAY AS CARGO: Used in an ancillary insurances relating to the cargo (e.g. increased value) when the Assured is not required to show evidence of loss or interest and can claim on the policy if he can show that a corresponding loss has been settled on the main cargo policy.

TOTAL LOSS: This can be actual total loss or constructive total loss.

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

TRUCKMENS LIABILITY FORM: See Motor Truck Cargo Policy



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

UNDER-INSURANCE: A condition in which not enough insurance is carried to cover the insurable value, and, especially, to satisfy a coinsurance clause.

UNDERWRITER: (1) A person trained in evaluating risks and determining the rates and coverages that will be used for them; (2) An agent, especially a life insurance agent, who might qualify as a "field underwriter."



VALUABLE PAPERS AND RECORDS INSURANCE: An Inland Marine or burglary insurance coverage providing for the replacement of valuable papers, records and forms.

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



WAITING PERIOD: A period of time between the beginning of a disability and the date benefits begin.

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.

WARRANTY: A statement made on an application for insurance that is warranted to be true in all respects. If untrue in any respect, even though the untruth may not have been known to the person giving the warranty, the contract may be voided whether or not the untruth or inexactness is material to the risk.

WATERBORNE AGREEMENT: A market understanding whereby Underwriters cover goods against war risks only whilst they are on the overseas vessel. This rule is relaxed only in the case of goods in a transhipping port for a short period awaiting onward carriage.

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.


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