B

Blanket Policy ‐ An individual policy covering several perils on a single amount rather than on individual limits.

Bodily Injury ‐ A term, mostly used in automobile insurance, meaning physical injury as a result of a car collision.

Broad coverage ‐ This provides comprehensive insurance coverage for buildings and named perils coverage for contents.

Breach ‐ Failure to live up to the conditions or warranties contained in a policy.

Broker ‐ An insurance broker sells insurance for more than one company.

Burglar Alarms ‐ Devices of various types which give warning of entry into premises by unauthorized persons.

Burglary ‐ Unlawful removal of property from premises involving visible forcible entry.

Burglary Insurance ‐ Insurance against loss of property caused by burglars.

Buy back Deductible ‐ A deductible which may be removed by payment of additional premium when full coverage is required.

Business Interruption Insurance ‐ Various types of insurance against business expenses and loss of income resulting from a fire or other insured peril.

 

C

Cancellation ‐ During the policy period, either the insurer or the customer may terminate coverage according to provisions in the contract.

Capacity ‐ The amount of capital available to an insurance company, or to the industry as a whole, for underwriting insurance coverage or coverage for specific perils.

Captive Insurance Company ‐ A company that is owned solely or in large part by one or more non‐insurance entities for the primary purpose of providing insurance coverage to the owner or owners.

Certificate of Insurance ‐ Written document stating that insurance is in effect, includes general statement of policy's coverage.

Certified Copy ‐ Reproduction of a document, that authority having custody of original signs and attests as a true, genuine and authentic copy.

Civil Commotion ‐ Disturbance involving a large number of individuals. An uprising of people creating a prolonged disturbance.

Civil Liability ‐ An individual's liability to others for harm caused to them by his or her actions. Claim ‐ The exercising of a policyholder's right under a policy to be paid by his or her insurance company for certain financial losses suffered.

Claimant ‐ One who makes a claim.

Clause ‐ Words in a policy which describe certain specifications, limitations or modifications.

Co‐insurer ‐ Two or more persons or companies who may be sharing a loss. A company whose policy covers the same risk as that of one or more other companies, is a co insurer whether the policies are written separately or together.

Collusion ‐ A secret agreement between persons to defraud another.

Commercial lines ‐ Refers to insurance for businesses, organizations, institutions, volunteer groups, governmental agencies, and other commercial establishments.

Compulsory Insurance ‐ Any form of insurance (usually auto insurance) that is required by law.

Concealment ‐ As applied to insurance, the withholding from an insurance company of information pertinent to a risk.

Conditions ‐ Conditions are terms of insurance contracts that impose obligations an insured person must satisfy in order to preserve coverage.

 

D

Death Benefit ‐ An amount set out in the policy representing the amount that will be paid in the event of death. Also referred to as "principal sum."

Debris Removal ‐ A provision in an insurance policy most commonly found in fire insurance providing indemnification for the cost of removal of the debris after a fire.

Declaration ‐ Statement, signed by the insured, warranting that information given by him is true.

Declarations ‐ The portion of the insurance contract that contains information such as the name and address of the insured, the property insured and its location and description, the policy period, the amount of insurance coverage, applicable premiums, and any other information provided by the insured.

Deductible ‐ An agreed specified sum to be deducted from the amount of loss and assumed by the insured.

Deductible Clause ‐ A clause defining the amount of loss for which insured is liable; defines insurer's and insured's contributions to cover losses.

Deferred Premium Payment Plan ‐ Plan providing for the payment of the premium over time.

Depreciation ‐ Reduction in value of property through use, ageing, deterioration and obsolescence.

Disclaimer ‐ A denial of liability for cause.

Disclosure ‐ Act of making known something to be known.

Dismemberment ‐ Loss of a limb, e.g., leg, arm, finger or eye.

 

E

Employer's Liability Insurance ‐ Protects an employer against injuries sustained by employees that fall under common‐law liability. This should not be confused with workers' compensation liability, which is liability as defined by workers' compensation law.

Endorsement ‐ An amendment added to a written document, particularly an agreement between parties, altering its provisions.

Exceptions ‐ Differences listed in a policy which amend the standard declarations so as to provide the required coverage.

Exclusion ‐ Risks, perils or properties defined in the policy as not covered.

 

F

Fire Insurance ‐ Coverage for losses from fire and lightning and also the resultant damage caused by smoke and water, usually supplemented by Extended Coverage Insurance.

First Party ‐ The person who is insured on the insurance policy. He or she is also the "policyholder" or "insured." There may be other people, named or unnamed, who are covered as well.

Flat Cancellation ‐ The cancellation of a policy as of the effective date with all paid premium refunded.

Fleet Policy ‐ In automobile insurance, this is a policy insuring a number of cars for one owner.

Forgery ‐ In general, any false writing with intent to defraud.

Fraudulent Misrepresentation ‐ A false statement made knowing it to be false and intending another to act on it to his detriment, or made carelessly or recklessly without regard to whether it is true or false.

 

G

Good Faith ‐ Most ordinary contracts are good faith contracts. Insurance contracts are agreements made in the utmost good faith. This implies a standard of honesty greater than that usually required in most ordinary commercial contracts.

Grace period ‐ A period after the premium due date during which an overdue premium may be paid without penalty. The policy remains in force throughout this period.

Gross Negligence ‐ The degree of negligence somewhat greater than ordinary negligence. It may be a reckless wanton and wilful misconduct causing bodily injury and/or property damage.

 

H

Hazard ‐ A risk or probability that the event insured against might occur.

Hazard, Moral ‐ Hazard arising from character, interest, habits and lack of integrity of the insured or person concerned.

Hazard, Physical ‐ Hazard arising from physical condition or characteristics of the object that is insured, e.g., using and storing volatile materials and substances on the premises.

Hit and Run Accident ‐ Collision between motor vehicle and/or a motor vehicle and another object and/or a motor vehicle and a pedestrian where a driver leaves the scene of the accident without identifying him/herself. This is an offence under the Highway Traffic Act.

Homeowners insurance ‐ An elective combination of coverages for the risks of owning a home. It may include coverage for fire, burglary, vandalism, earthquake and other perils.

Hostile Fire ‐ A fire which occurs in or escapes to a place not anticipated, e.g., a fire in a fireplace becomes uncontrollable and ignites something externally. See Friendly Fire.

 

I

Indemnify ‐ To compensate the insured person for a loss, in whole or in part, by payment, repair, or replacement.

Inland Marine Insurance ‐ Coverage for movable property in transit, excluding ocean crossing; includes bridges and tunnels, because they are implements of transportation.

Inspection ‐ Independent checking of facts about an applicant or claimant, usually by a commercial inspection agency.

Insurable Interest ‐ An interest which the insured must have in the subject matter of the insurance he buys so that if the event insured against occurs, the insured will suffer a pecuniary loss.

Insurance ‐ A contract between an insurance company and its customer for a specific period of time. It protects the customer financially against a loss. Insurance is also a mechanism for dispersing risk, because it shares the losses of the few among the many.

Insurance Policy ‐ A written contract of insurance.

Insured ‐ The entity (individual or otherwise) whose risk of financial loss from an insured peril is protected by the insurance policy.

Insurer ‐ The company providing the insurance coverage.

Insuring Clause ‐ Describes the intent of the policy, just what insurance coverage is provided by the policy and in what limits.

 

J

Joint and Several Liability Clause ‐ This exists when the situation is such that a creditor in the case can sue any one of the debtors individually, or any, several or all of them, at the creditor's option.

Judgment ‐ An order given by a Court.

 

K

No Glossary Terms For This Letter

 

 

 

 

 

 

L

Lapse ‐ An insurance policy which, having reached its expiry date, is not renewed or extended is said to have lapsed.

Liability ‐ This is a legally enforceable obligation. Liability insurance pays for the damages or losses suffered by others for which the insured person is legally responsible.

Liability Insurance ‐ Insurance which agrees to indemnify the insured for sums he may be required by law to pay to third parties as damages for bodily injury or damage to property.

Limit of Liability ‐ The maximum amount, as stated in the policy, which an insurer is bound to pay in case of a loss.

 

M

Material Fact ‐ Information about the subject of insurance, insured risk, that, if known, would change the underwriting basis of the insurance, and which could cause the insurer to refuse the application or charge a higher rate.

Material Misrepresentation ‐ When a policyholder or applicant makes a false statement of material (important) fact on the application, he or she has committed a material misrepresentation, which may result in loss of coverage.

Moral Hazard ‐ A position taken by an insured that increases the chance of a loss or the seriousness of a loss.

 

N

Named Insured ‐ The person in whose name the policy is issued (see Insured or Policyholder). Technically, he or she would be the first party to the contract, the second party being the insurance company that issues the policy.

Named Perils (or Basic) Insurance Policy ‐ Covers only those perils, such as fire and theft, that are specifically named in the insurance policy.

Natural Disaster ‐ A disaster caused by the elements such as flood, earthquake, tornado, lightning, etc.

Negligence ‐ To fail to do what a reasonable and prudent person would do (or to do what such a person would not do); this can result in property damage, injury or death.

No‐Fault ‐ This type of automobile insurance provides some compensation for personal injury and death arising out of a motor vehicle accident, with payments made regardless of who caused the loss. However, it does matter who caused the accident; if found to be at fault, a driver may experience an increase in future premiums.

Non‐disclosure ‐ A contract of insurance is based on utmost good faith. An applicant for insurance is required to disclose to the company all material facts which are necessary to underwrite a policy. If the applicant does not disclose all these facts, he/she is guilty of non disclosure and may risk having coverage voided from inception.

Non‐hazardous ‐ A risk not involving the ordinary or average hazard of its class, or a risk free of the average hazards of all classes of risk.

Non‐insurable Risk ‐ A risk for which no insurance can be written. The chance of loss is very high or cannot be accurately measured.

Notice of Loss ‐ Notice detailing the losses and the circumstances surrounding how they occurred required by insurance companies immediately after an accident or other loss.

Notice of Termination ‐ The conditions of insurance policies stipulate how a policy may be terminated during its term.

 

O

No Glossary Terms For This Letter

 

 

 

 

 

 

P

Premium ‐ An insurance premium is the money the policyholder pays to the insurer for financial protection against specific risks for a specific time‐span.

Product Liability Insurance ‐ Protects manufacturers' and distributors' exposure to liability for bodily injury or property damage caused by the negligent manufacturing of the product.

Property Insurance ‐ Covers an insured's property against damage, destruction or loss by a covered peril.

Proximate Cause ‐ Cause of loss or damage. Unbroken chain of cause and effect between the occurrence of an insured peril and damage to property.

 

Q

No Glossary Terms For This Letter

 

 

 

 

 

 

R

Regulator ‐ The federal government agency responsible for the control and regulation of the insurance industry, like SECP.

Reinstatement ‐ The reactivation of suspended or cancelled insurance.

Reinsurance ‐ Insurance purchased by an insurance company from another insurance company (reinsurer) to provide it protection against large losses on cases it has already insured. Essentially, insurance for insurance companies.

Rider (or Endorsement) ‐ An amendment to an insurance policy. It is used to add or remove coverage.

Risk ‐ A chance of loss or injury for which an insurance claim may be submitted. For a risk to be insurable, related events that could result in a claim must be unexpected.

 

S

Salvage ‐ On paying for a total loss of property, an insurance company takes title to what remains of or what is recovered of the property. This is a right of salvage.

Schedule of Insurance ‐ A list of items individually covered by a policy.

Standard Risk ‐ A person who, according to a company's underwriting standards, is entitled to purchase insurance protection without special restrictions.

Subrogation ‐ Once a company has paid a loss for which someone other than the policyholder is responsible, it may have the right to recover this loss from the guilty party. This right is called subrogation.

Surrender ‐ Cancellation of a policy before its normal expiry by mutual consent of insured and insurer.

Survey ‐ An examination of a risk to be insured, following which the surveyor completes a form giving all particulars.

 

T

Third Party ‐ A claimant under a liability policy, so called because he is not one of the two parties (insured and insurer) who has entered into the insurance contract which pays his claim.

Third‐Party Liability (Auto) Insurance ‐ Covers an insured if his or her car injures someone else or damages property and he or she is held legally responsible.

 

U

Umbrella Policy ‐ A special form of liability policy designed to protect the insured for certain unknown contingencies over and above the normal coverage and to provide excess insurance.

Underwriter ‐ An underwriter is an employee of an insurance company who looks at an insurance application and decides whether or not the insurance company can or should provide the applicant with insurance, based on the risk that person presents.

Underwriting Profit or Loss ‐ The amount of money that an insurance company gains or losses as a result of its insurance operations. It excludes investment transactions and income taxes.

Underwriting Rules ‐ The rules used by insurance companies to assess the risk they are taking on by insuring a particular customer. These rules are set individually by insurance companies.

Uninsurable Perils ‐ These are events or situations for which insurance coverage cannot be purchased. The damage as a result of these incidents is usually predictable or preventable. For example, if you build your house on a flood plain, your house will, at some point, be flooded. Flooding, in this case, is an uninsurable peril.

Utmost Good Faith ‐ A phrase in a legal document calling for the highest standards of integrity on the part of the insured and the insurer.

 

V

No Glossary Terms For This Letter

 

 

 

 

 

 

W

Waiting period ‐ A period of time set forth in a policy which must pass before some or all coverage begin.

Waiver ‐ The intentional relinquishment of a known right. A waiver under a policy is required to be clearly expressed and in writing.

Warranty ‐ A statement by the policyholder that certain conditions of the insured risk exist or will be met. If found to be false, it provides the basis for voidance of the policy.

Without Prejudice ‐ An action taken during claims negotiations designated as "without prejudice" is intended to be without disadvantage to the existing rights of the parties.

 

X

No Glossary Terms For This Letter

 

 

 

 

 

 

Y

No Glossary Terms For This Letter

 

 

 

 

 

 

Z

No Glossary Terms For This Letter