Important terms on Insurance
Abandonment – Intentional, voluntary relinquishment of property or legal rights.
Abatement – The refund of duties on damaged imported goods.
Absolute Liability – A legal doctrine where liability is imposed without fault.
Acceptance – Unqualified assent to the terms of an offer to form a contract.
Accident – Unplanned injurious or damaging event interrupting normal activity.
Actuary – A professional trained in mathematics to apply probability theory to insurance.
Aggregate Deductible – A maximum limit to the deductible amount for claims.
Aggregate Products Liability – Total money paid under a liability policy for product claims.
Aircraft Insurance – Insurance covering aircraft, including engines and equipment.
All Risks – Insurance coverage that protects against all risks except those explicitly excluded.
Annual Premium – The amount paid yearly for an insurance policy.
Assignment – Transfer of rights or property to another party.
Bail Bond – A bond to secure the release of a person under arrest.
Bailment – Delivery of goods by one person to another for a specific purpose.
Bankruptcy Action – Legal process for dealing with debt when an individual or business cannot repay creditors.
Barratry – Fraudulent acts by a ship’s master or crew causing damage to the ship or cargo.
Beneficiary – The person designated to receive benefits from an insurance policy.
Bid Bond – A guarantee that the bidder will undertake the contract under the terms at which they bid.
Binder – A temporary insurance contract providing coverage until a permanent policy is issued.
Bodily Injury – Physical harm to a person.
Broker – An intermediary between an insurer and a policyholder.
Business Interruption Insurance – Coverage for loss of income due to a halt in business operations.
Cancellation Clause – Provisions for terminating an insurance policy before its expiry.
Carrier’s Liability – The responsibility of a carrier for loss or damage to goods during transport.
Catastrophe – A significant and often sudden disaster causing substantial damage or loss.
Certificate of Insurance – A document proving that insurance coverage exists.
Claim – A request for payment under an insurance policy.
Coinsurance – A provision in insurance policies requiring the insured to bear a portion of the loss.
Collision Insurance – Coverage for damage to an insured vehicle resulting from a collision.
Comprehensive Insurance – Broad coverage for loss or damage not resulting from a collision.
Deductible – The amount the insured must pay out of pocket before the insurer pays a claim.
Depreciation – Reduction in the value of an asset over time.
Endorsement – An amendment or addition to an insurance policy.
Exclusion – Specific conditions or circumstances for which the policy does not provide coverage.
Ex Gratia Payment – A payment made by an insurer not legally required under the policy.
Fidelity Bond – A form of insurance protection that covers policyholders for losses incurred as a result of fraudulent acts by specified individuals.
Fire Insurance – Coverage for loss or damage caused by fire.
First Party – The insured party in an insurance contract.
Flood Insurance – Coverage for damage caused by flooding.
Fraud – Intentional deception to secure unfair or unlawful gain.
General Average – A principle of maritime law under which all parties share in a loss incurred voluntarily for the safety of all.
Grace Period – A period beyond the due date during which a policy remains in effect without penalty.
Hazard – A condition that increases the likelihood of a loss.
Incontestability Clause – A provision that prevents the insurer from voiding coverage due to misrepresentation after a specified period.
Indemnity – Compensation for loss or damage.
Inflation Protection – A feature adjusting the value of benefits to account for inflation.
Insurable Interest – A stake in the value of the insured item or person.
Lapse – Termination of a policy due to non-payment of premiums.
Liability Insurance – Coverage for legal liability resulting from injuries to other persons or damage to their property.
Limit of Liability – The maximum amount an insurer will pay under a policy.
Loss of Use – Coverage for additional costs incurred when the insured property is unusable.
Marine Insurance – Coverage for loss or damage to ships, cargo, terminals, and transport.
Moral Hazard – The risk that a party insulated from risk behaves differently than if they were fully exposed to the risk.
Named Perils – Specific risks listed in an insurance policy.
Negligence – Failure to take proper care in doing something, resulting in damage or injury.
No-Fault Insurance – A type of insurance where policyholders are compensated by their own insurer regardless of fault.
Open Policy – A policy covering all shipments made by the insured over a period.
Peril – A specific risk or cause of loss covered by an insurance policy.
Personal Injury Protection (PIP) – Coverage for medical expenses and lost wages regardless of fault.
Policyholder – The individual or entity that owns an insurance policy.
Premium – The amount paid for an insurance policy.
Professional Liability Insurance – Coverage for professionals against claims of negligence or mistakes.
Proof of Loss – A formal statement made by the insured to the insurer regarding a claim.
Proximate Cause – The primary cause of a loss.
Reinsurance – Insurance purchased by an insurance company from another insurance company to mitigate risk.
Replacement Cost – The cost to replace an insured item without deduction for depreciation.
Retention – The amount of risk retained by an insurance company before reinsurance.
Retroactive Date – The date from which coverage is provided under a claims-made policy.
Rider – An additional provision to a policy that modifies coverage.
Risk – The chance of loss or the subject matter of an insurance policy.
Salvage – The remaining value of an insured item after a loss.
Subrogation – The right of an insurer to pursue a third party responsible for an insurance loss.
Sum Insured – The maximum amount an insurer will pay under a policy.
Surety Bond – A contract guaranteeing the performance or obligations of a third party.
Surrender Value – The amount available to the policyholder if they terminate a policy before maturity.
Third Party – Any individual or entity other than the insured or insurer.
Total Loss – A situation where the insured item is completely destroyed or damaged beyond repair.
Underwriter – The person or company responsible for evaluating risk and issuing insurance policies.
Uninsurable Risk – A risk that an insurer will not cover due to its high likelihood of loss.
Utmost Good Faith – The principle requiring all parties in an insurance contract to act honestly.
Valued Policy – A policy that pays a predetermined amount in the event of a total loss.
Waiver – The voluntary relinquishment of a known right.
Workers’ Compensation – Insurance providing wage replacement and medical benefits to employees injured in the course of employment.
Written Premium – The total premiums written by an insurer during a specific period.
Actuarial Valuation – An assessment of the financial status of a pension fund or insurance policy.
Adverse Selection – The tendency of higher-risk individuals to purchase insurance more frequently.
Claim Reserve – Funds set aside to pay claims that have been reported but not yet settled.
Combined Ratio – A measure of profitability used by insurance companies.
Direct Writer – An insurance company that sells its policies directly to consumers without agents.
Excess and Surplus Lines – Insurance provided by non-admitted insurers for high-risk markets.
Experience Rating – A method of setting premiums based on past claims experience.
Frequency – The number of times a loss occurs.
Indemnity Insurance – Coverage that provides compensation for actual losses incurred.
Loss Ratio – The ratio of losses paid by an insurer to premiums earned.
Multiperil Insurance – A package policy providing coverage against multiple risks.
Occurrence – An event that results in an insured loss.
Pool – A group of insurers or reinsurers sharing risks.
Risk Assessment – The process of evaluating risks and their potential impact.
Self-Insurance – A system where a company sets aside funds to cover potential losses.
Stop-Loss Insurance – Coverage that provides protection against catastrophic or unpredictable losses.
