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A.O.A.
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Any one accident. The term in relation to liability insurance 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.
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A.O.V.
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Any one vessel. The term, which relates to Marine Cargo Insurance, refers to the insurer's maximum commitment under the policy for all cargo in respect of any one vessel.
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A.O.Y.
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Any one year. The term refers to the maximum liability of the insurer under the policy for all claims preferred during the policy period.
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Abandonment
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In Marine Cargo and Marine Hull Insurance, 'Abandonment' is a condition precedent to a constructive total loss of the property insured. The insured must inform the insurer of his intention to abandon the property before doing so. But the insurer is under no obligation to accept the abandonment.
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Acceptance
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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.
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Access to the Records Clause
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The term, also called the Inspection of Records Clause, refers to the right of the reinsure to inspect any books or records of the Reinsured Company, at the expense of the former.
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Accessory
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The term generally refers to those parts which are directly supplied by the manufacturer along with the equipment /vehicle but which are not essential for the operation/running of the equipment/vehicle.
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Accident
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An unlooked for mishap or an untoward event which is not expected or designed.
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Accident and Sickness Insurance
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Term used to denote a personal accident insurance policy, which is extended to cover sickness benefits also. However benefits relating to sickness extension will be restricted to weekly compensation for temporary total disablement and for reimbursement of medical expenses towards treatment in a hospital or a nursing home for all sickness other than those which are excluded. The cover will be subject to a period exclusion and a maximum period limit in respect of any one sickness A policy like this which was in existence in the Indian Market was discontinued after nationalization of general insurance. It is possible that in the current scenario some companies introduce a similar insurance cover with the approval of the regulatory authority. (See also "Accident Insurance").
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Accident Frequency
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A measurement of number of accidents occurring in a given period.
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Accident Insurance
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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 injuryon payment of extra premium.
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Accident Severity
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A measurement of the seriousness of accidents occurring within a given period, judged either by their cost or by the nature of the damage or injury to which they give rise
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Accidental Means
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Purely by circumstances which are wholly unexpected, unforeseen and beyond the control of the insured/beneficiary under the policy.
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Accommodation Line
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Acceptance by a reinsurer, as a special consideration, of a small accommodation line on a reinsurance treaty or a facultative offer. This situation would arise where a reinsurer might have shares on many profitable treaties from a company and the said company might request the reinsurer for some supporting share on a treaty with unsatisfactory results.
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Account- Profit & Loss Appropriation
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The format of this account is also prescribed by the IRDA Regulations. This is prepared annually at the end of the year. This shows the appropriations made out of the net profit earned during the year. The appropriations can be dividends, transfer of general reserve or dividend equalization etc. The final balance in the Profit & Loss Appropriation Account is shown in the liabilities side of the balance sheet.
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Account- Revenue
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This is the prescribed form, in which the final account is to be drawn for each department of premium underwritten by the insurer. The format is prescribed by IRDA Regulations. Thus, there is a separate revenue account for Fire Department, Marine Dept. and Misc. Dept. Such revenue accounts enable the underwriter to assess the underwriting profit generated by a particular department premium.
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Account-Profit & Loss
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This is also a part of the final accounts in which the general income and expenditure pertaining to the shareholders funds are accounted apart from transfer of net underwriting profit or loss from each revenue account. The format of this account is prescribed by the IRDA regulations. This account is prepared for the transactions of the year and is intended to show the net profit or loss of the company for the year.
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Accounting Policy
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As there are different methods of accounting especially for specific items in the insurance companies, the company is expected to explain the method of their accounting by its `accounting policy', which will be attached to the annual accounts.
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Accounting Standards
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The Institute of Chartered Accountants of India has prescribed certain standards to be followed while accounting certain types of transactions so that uniform interpretation of the accounts of the various companies is possible. These standards are prescribed in consonance with similar international standards practiced world over. Most of the standards are to be mandatory followed by the Companies in preparation of their accounts. IRDA Regulations also prescribe that it is mandatory for the insurance companies to follow the prescribed accounting standards which are around 22 in number as on date. Only the accounting standards in respect of investment income are not applicable to insurance companies.
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Accounting- Cash system
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Basis of accounting by a company where all accounting is done only if money is either received or paid and so no dues are recognized.
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Accounting- mercantile system
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Basis of accounting by a company where in addition to the money received or paid outstanding incomes as well as expenses are recognized.
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Accumulated Stocks Clause
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A Clause, which appears in Fire, Consequential Loss Policy. The insured, as a part of their business policy, may maintain stock of finished goods. Such an accumulated stock may be utilized during the period of interruption caused by damage to meet the demand. Consequently, during the indemnity period it would appear that there was no reduction in turnover, even though the manufacturing activities are stopped. In turn, there may not be any claim in respect of loss of gross profit.
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Acquired Immuno Deficiency Syndrome (Aids)
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Condition characterized by illness indicative of reduced immune responsiveness in otherwise healthy individuals. The Standard Mediclaim Insurance Policy does not extend cover for AIDS.
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Acquisition Cost factor
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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.
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Acquisition Costs.
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This refers to the expenses incurred by the Direct Insurer for acquiring Direct Premium. Normally commission expenses come under this category. Even brokerage paid if any and also initial Publicity expenses for product launches can be considered as Acquisition Costs.
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Act in force Clause
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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.
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Act Liability with Fire &/or Theft
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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 or theft. 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.
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Act of God Perils
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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.
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Act only Policy
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Insurance Coverage for all motor vehicles to indemnify the insured upto 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.
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Actual Total Loss
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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.
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Actuarial assessment of employees
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The employees of a company may be entitled to various benefits by way of terminal dues at the time of retirement or resignation from the company. Eg; Gratuity for those who have completed 5 years of service, encashment of accrued leave at the time of retirement, commutation of pensionary benefits etc. Even though these liabilities arise at the time of retirement only, the employer is expected to evaluate such future liabilities by way of actuarial valuation and provide for the same in the current year's accounts. Such provisions are called Actuarial assessment of employees' liabilities.
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Actuarial Science
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A branch of knowledge which deals with mathematics of insurance. It is used in the evaluation of various risks, premium fixation commensurate with the risks and also provisions relating to unexpired risks, unexpired liabilities etc.
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Ad valorem
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In proportion to the value.
1. Insurance premium in respect all property insurance coverage is fixed mostly in relation to the insured value of the property.
2. Calculation of stamp duty on certain portfolio is related insured value under the policy. Ex. Marine Cargo and Personal Accident Insurances.
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Additional Expenses-Strikes
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If the destination port is strike-bound at the time of arrival of the ship carrying cargo meant for that port, the shipowner 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.
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B/L
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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.
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Back Office
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Immediate controlling office, which does not directly transact business, but monitors and controls the marketing offices. Its main functions include looking to accounting records, ensure compliance by the marketing offices of the government regulations, company directives, guidelines etc. and also hold communication with marketing offices on all matters concerning the requirements of both sides.
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Back-Up XL Covers
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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.
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Backlog
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In insurance, extent of unattended proposals, enquiries or other references, un-issued policies/documents and indisposed claims preferred on policies.
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Bad Debts
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A debt which is impossible to be collected and consequently has become worthless to the creditor.
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Baggage insurance
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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 enroute, 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.
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Bagged Cargo warranty
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Marine Cargo insurance policies normally exclude loss of contents from bags through seams and also natural loss in weight of cargo. In order that this issue is successfully addressed the insurers put a warranty in the policy to the effect that Shortage in damaged bags will be reckoned by a comparison of the weight of similar number of bags of the same lot arriving sound at destination and Policy will exclude shortage from sound bags
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Bailee
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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.
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Bailment
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Contract concerning transfer of property from bailor to a bailee.
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Bailor
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The person who transfers his property to the temporary care, control and custody of another, while retaining the ownership with him.
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Balance As Per Contra
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There could be certain transactions wherein the insurance companies invest the funds and create investments on behalf of a particular fund and hence the assets cannot be treated as the assets of the insurance company. Such investments are shown on the assets side along with the wordings `as per contra' which means similar balance will appear in the liabilities side which represents the fund for the balances for which the investments are made. eg. investments made in respect of Environment Relief Fund.
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Balance Sheet
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Accounting statement showing the financial condition of a company at a particular date. Listed on the statement are the company's assets and liabilities and capital and surplus.
Balance sheet is a snapshot of the values of assets and liabilities of the Company on a particular date. Drawing a balance sheet, as per the format prescribed under the IRDA Regulations, as on the last date of the financial year, is mandatory. However, such balance sheet can be prepared on any day. The balance sheet lists out the value of all assets to the company as against the various liabilities to the company and both the values should be equal on any particular day.
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Balance Sheet Reserves
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Amount expressed as a liability on the insurance company's balance sheet for benefits owed to policyholders. These reserves must be maintained according to the provisions of the insurance act, Regulations of the Insurance Regulatory and Development Authority and also as per the actuarial formulas. These reserves serve to guarantee that all benefit payments for which the insurance company has received premiums will be made.
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Balances- Agents
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As the business of insurance is mostly procured through the Agents all the premium transactions are accounted agent wise to arrive at dues from/dues to agents at the end of the year. As the number of transactions will be more, they are maintained separately for premium transactions and commission transactions. All the debit balances at the end of the year are added and shown in the assets side and the credit balance on the liability side of the balance sheet.
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Balances- Aging Of
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The account balance of any account will comprise of accounting entries over the entire period and finally at the end of the year, the balances may arise either out of last few transactions or out of the first few transactions. Hence, it is necessary to identify as to how long these transactions are outstanding in the books of accounts. For instance, a debtors balance can arise out of the last few months balances or out of first few months balances. In the latter case, it may look that they are outstanding for almost a year. Hence, steps should be taken for recovery. Such meaningful analysis can be done only when the year end balances are classified according to the age of the transaction.
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Balances- Coinsurance
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There are certain risks, which are shared between the direct insurers at the instance of the insured. These are of coinsurance transactions. Here the lead Insurer collects the 100% of the premium and in turn pass on the respective share of the premium to the co-insurance Companies. In the case of claims also, the lead insurer pays 100% of the claim and collects the co-insurer"s share of claim later. Such transactions are routed through the co-insurance company's account codes and the balances in these accounts are reflected in the assets side or liability side of the balance sheet, depending on the nature of balance.
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Balances- Confirmed
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The balances in the account of the insurance company may arise out of the transactions with outside parties who have to confirm their balances so as to certify the correctness of the accounts. For instance a Bank A/c. shown with balance as per the account has to be confirmed by the banker. Similarly an amount shown as due from outsider has to be confirmed as due from outsider. Confirmed balances add to the correctness of the balance.
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Balances- Inter Branch/ Office
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If the insurance company has large number of Branches for its operations, there could be many transactions between the Head Office of the Company and its Branches and also between the Branches. The balances in these Branch Accounts are grouped under Inter Branch Account Balances and shown in the balance sheet.
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Balances- Reconciled
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Various account balances at the end of the year are made up of different accounting entries and each entry in each account should be reconciled with the corresponding entry in which case, every item in the account balance at the end of the year can be explained. When such a detailed analysis of the transactions is done, the balances are said to be reconciled. Otherwise they are treated as reconciled balance.
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Balances-Reinsurance Company
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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.
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Ballast
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Material carried in vessel to ensure stability when the vessel is without any cargo.
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Bank balance as per books and as per bank
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As the company is entering all its bank transactions in its bank account in the ledger, the bank will also be maintaining a ledger account to record all the transactions pertaining to the company which will be reflected in the pass book and will also show the balance as per bank at any point of time. So the bank account will show balance as per the company's accounts and also as per the books of the bank.
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Bank charges
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The banker levies certain charges for some operations in the bank account like realizing outstation cheques, for effecting a bank to bank transfer, for returning the dishonored cheques etc. Such levies are accounted as bank charges in the books of account of the company by passing journal entries.
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Bank Guarantee
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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.
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Bank Reconciliation
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Normally the bank account as per the books of the company and as per the bank should show the same balance. But there could be cases where cheques are deposited by the company, for which the company has increased its bank account balance but the same are not yet cleared in the clearing and hence the bank will show a lesser balance. Therefore the company has to prepare a statement showing how the balance between the company's accounts and as per the bank differs and what are the reasons for the same. Such a statement reconciling the bank balance as per company's books with that of the bank, is called Bank Reconciliation Statement.
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Bank Transfers
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When funds are transferred from one bank account to another the same has to be recorded in the books of account. This is done by way of bank transfer journal entry.
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Bankers Indemnity Policy
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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
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Bar Chart
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A form of graphical presentation of data to highlight the main features of a frequency distribution of different kinds of risks and their consequences.
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Bareboat Charter
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Form of Time Charter where the charterer hires the vessel and meets all expenses incurred during the period of the charter.
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Barges
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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
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Barratry
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Wrongful act willfully 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.
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Base Premium
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Premium charged by the direct insurer on the policy
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Basic Commission
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The commission on a reinsurance proportional treaty which is always applied on the written premium of the treaty.
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Basic Premium
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The Gross Premium charged by the insurer to the insured under a policy.
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Basic Rate
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The rate of premium shown in the Rate Guide or Manual of the Insurance Company for a specific insurance cover.
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Basic Rate
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The rate of premium shown in the Rate Guide or Manual of the Insurance Company for a specific insurance cover.
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Basis of Loss Settlement
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A separate section inserted in all the policies spelling out the basis of settlement of different types of claims under the policy.
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Basis of Valuation Clause
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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.
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C&F
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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.
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C.I.F.
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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.
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C.I.P.
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Consignments in a completely knocked down condition, which are assembled at destination to be made into whole units.
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C.K.D.
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Consignments in a completely knocked down condition which are assembled at destination to be made into whole units.
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Caking
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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.
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Calendar Year Experience
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Business results during a calendar year analysed and experience studied on a calendar year basis.
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Call Option/ Put Option
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These terms are used to refer to the right of the investor or borrower to terminate the borrowing programme. For instance, in the case of a 7 year Debenture with `Call and Put Option at the end of 3 years, the borrower has an option to repay the money raised by the Debentures or the lender has an option to call for the redemption at the end of 3 years, instead of waiting for 7 years. When the option is exercised by the borrower it is called Call Option and when the Option is exercised by the lender it is called as Put Option. The instruments can be designed to have either Call Option only or Put Option only or both options.
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Cancellation
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The discontinuance of an insurance policy before its normal expiry date stipulated in the policy
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Cancellation Clause
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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.
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Cancellation of Treaty
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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.
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Capital Sum Insured
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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.
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Capital, Share
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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.
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Capital- Authorized
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This represents the shareholders contribution towards the capital of the company.
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Capital- Paid up
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This represents the maximum amount upto 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.
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Captain's protest
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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 Captain's Protest. This document is requisitioned by the insurer in case of a claim for heavy weather damage to the insured cargo.
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Debenture
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A bond that is backed only by the general credit of the issuing corporation. No specific property is pledged as security behind the loan.
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Debentures - Optionallly Convertible
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A Company can issue Debentures giving the option to the lender to convert into Equity at a specified price or a formula and in case the lender does not exercise the option the Debenture will be redeemed on the specified date. In this case the lender has an option to convert or not depending on the market price of the share on the date of the conversion or any other factor he may consider for Conversion
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Debentures - Project
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Money raised through Debentures by a Company, for setting up a new project or for Capital Expenditure. Normally the period of such Debentures are long term which are covered not only for the construction period of the project but also upto the period by which the Company will be able to earn out of the new project to redeem the debentures. Normally such Project Debentures are appraised by the Financial Institutions.
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Debentures - Rated Or Unrated
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Debentures are instruments, which are normally rated by Credit Rating Agencies like ICRA, CRISIL. These Agencies rate the Debentures depending on the capacity of the Comapny to redeem the debentures on the due dates and also to pay interest on due dates. Normally a strong rating is indicated by a rating of 'AAA' and it goes down to `AA' or `A', even `BBB'. However IRDA Norms prescribe that the minimum rating for investments should be of `AA' and it can be reduced to 'A+' in specific circumstances by the Investment Committee of the Insurance Company.
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Debentures -Convertible / Non-Convertible
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When Debentures are issued with specific understanding that after a specified period the same will be converted into Equity Capital of the Co. either at a price determined or a price to be fixed as per the formula determined. For instance, a Debenture of Rs. 1000/- issued at 14% interest for 5 years can be converted at the end of 5 years into Equity at a price of say Rs. 15 per share (Face value Rs. 10) at the end of 5 years or at a price equivalent to the average of the six monthly trading price prior to the date of conversion. When no such compulsory conversion into Equity is specified in the Debenture the same becomes Non-Convertible Debenture.
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Debentures -Unsecured
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Debentures raised without any security
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Debentures raised without any security
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A Company can borrow money from the market for meeting its Working Capital requirements by issuing Debentures. Normally such Debentures are for short periods like 1 or 2 years. They could be either Secured or Unsecured.
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Debentures- Secured
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Debentures issued by charging any of the assets of the Co.
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Debit and Credit Balances
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Have been passed can be balanced. If the value of debit items is more than that of credit items the account will show a debit balance and if the value of all the credit entries in the account are more than that of debit entries it will show a credit balance.
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Debris Removal Clause
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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.
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Decision Support System
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A part of the Management Information System that provides answers to problems and that integrates the decision-maker into the system as a component.
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Declaration
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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.
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Declaration Clause
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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.
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Declinature
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Refusal of an insurer to accept a risk proposed for insurance or to renew an existing insurance.
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Deductible-period
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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.
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Defendant
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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.
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E & O.E.
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Errors and omissions excepted.
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Each and Every Loss
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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 en 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.
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Economic Limit in increased cost of working
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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.
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Eight System
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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.
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Employer Form
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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 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.
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Employment and Study policy
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A special policy designed for Indian Citizens temporarily posted abroad in a sedentary non-manual work or students prosecuting studies or engaging in research activities abroad. The cover has limits as regards age of the persons to be covered and the insurer's liability. The cover is offered under two plans one for "Worldwide excluding U.S.A. and Canada" and the other "Worldwide including U.S.A. and Canada"
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Endorsement
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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.
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Equitable interest
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An interest recognisable at law.
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Facultative Obligatory Treaty
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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.
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Failure of Consideration
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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.
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Fidelity Exclusion
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1. A provision in burglary and money insurance policies excluding loss caused by the infidelity of the employees of the insured.
2. A provision in liability and professional indemnity policies excluding coverage for dishonest act of the insured.
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Fidelity Guarantee Policy
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An Insurance Policy which reimburses an employer for losses caused by dishonest or fraudulent acts of employees.
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Fiduciary
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A person who holds something in trust for another
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Fiduciary Relationship
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Relationship arising when a person holds something in trust for another.
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Field Staff
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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'.
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File and Use Procedure
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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.
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Financial Reinsurance
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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.
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Financial Risks
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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.
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Financial Underwriting
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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.
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Finished Goods
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Products or goods which have been fully manufactured, assembled or built and are ready for sale.
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Gainful Employment
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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)
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Geographical Limitation
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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.
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Goods In Trust or on Commission
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The person who holds the property of another either in trust or commission is deemed to posses an insurable interest in such property he can accordingly insure them in his name.
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Grievous Injury
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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.
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Gross Premium
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The premium paid by the policyholder.
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Group Discount
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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 Medicalim 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.
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Group Insurance
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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.
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Group Mediclaim Insurance
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Mediclaim 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 requisitst for a group policy are: Some common relationship among the persons to be insured and a central point for administration of the policy schem.
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Group Personal Accident Insurance
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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 requisitst for a group policy are: Some common relationship among the persons to be insured and a central point for administration of the policy scheme.
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Health Insurance Business or Health Cover
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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.
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Hospital Confinement Indemnity Insurance
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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 mediclaim 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.
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Hospitalisation
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Admission of a patient in a hospital or a nursing home and treatment to him for injury, illness, sickness or disease
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Hospitalisation Insurance
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Insurance Coverage to individuals providing for reimbursement of expenses incurred towards hospitalisation treatment in connection with any injury, illness, sickness or disease. The cover is extended for domiciliary hospitalisation also under ceratin conditions. Individuals, as also their dependants can be covered under the policy.
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Imputed Negligence
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Case in which responsibility for damage can be transfered from the negligent party to another person, such as an employer.
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In course of employment
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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 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.
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Incidental Contract
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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 Mediclaim 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.
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INCO Terms 2000
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Internationally accepted and employed terms for contracts of sale, first published by the International Chamber of Commerce (ICC) in 1936. They were revised 7 times since then. The latest revision, known as "Incoterms 2000", came into force on January 1, 2000. 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.
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Income
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Cash flow from all sources, normally expressed on an annual basis
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Incompetent
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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.
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Increase in Cost of Working
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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.
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Incurred Loss
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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.
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Incurred Loss Ratio
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The ratio that the incurred loss bears to the gross premium
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Incurred-but-not-Reported (IBNR) Reserves
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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.
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Indemnifiable Loss
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Loss recoverable under the policy in view of its being caused by peril insured against.
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Indemnitee
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Recipient of an indemnity payment
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Indemnitor
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Provider of an indemnity payment
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Indemnity
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To compensate the sufferer of the loss to the extent of the loss suffered by him.
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Indemnity Period
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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.
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Independent Survey Report
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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.
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Indexing
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Adjusting of values over time to reflect the impact of inflation
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Indian Reinsurer
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An insurer who carries on exclusively reinsurance business and is approved in this behalf by the Central Government..
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Inductive Reasoning
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Type of logic that makes the assumption that what has happened in the past will happen in the future, given the same conditions surrounding the two occurrences.
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Inevitable Accident
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Accident , to which no fault can be attributed to anybody.
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Infidelity Exclusion
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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.
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Infidelity of Employee
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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.
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Jacket
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Outer Covering containing an Insurance Policy. Normally it furnishes brief details of coverage, exclusions, conditions etc relating to the insurance cover granted.
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Jan Arogya Bima policy
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Policy specially designed to provide cheap medical insurance coverage to poorer sections of the society. The coverage is broadly along the lines of the mediclaim policy for individuals. Individuals and their family members can be covered. Age limit is 5 to 70 years. Children between the age of 3 months and 5 years can be covered provided one or both parents are covered concurrently.
Sum Insured per person is Rs.5000.
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Janata Personal Accident Insurance (Group)
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Policy exactly similar to the Janata Personal Accident Insurance Policy for Individuals issued for a group of persons in the same manner as in the case of a group personal accident insurance policy
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Janatha Personal Accident Insurance (J.P.A)
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An accident insurance cover specifically for the rural people and the common man. Covers death AND permanent total disablement due to accidents Minimum and Maximum Capital Sum Insured is Rs.25000 and Rs.1 lakh respectively. Long term cover up to 3 - 5 years also are provided with a discount on the cumulative premium.
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Joint and Several Liability
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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.
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Judgement
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Determination of a court of competent jurisdiction upon matters submitted to it
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Judgement by Default
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Judgement delivered in a court in the absence of one of the parties to the litigation, either plaintiff or defendant
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Judgment Rating
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Rate-making method for which each exposure is individually evaluated and the rate is determined largely by the underwriter's judgment.
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Just Compensation
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Full Indemnity by the insurer for the loss sustained by the insured.
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Key Person Health Insurance
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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.
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Known Loss
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A loss about which the insured and/or the insurer is aware at the time when insurance is effected
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L.P.G. Gas Dealers Insurance
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A comprehensive insurance package for the benefit of the L.P.G. gas dealers providing cover for the insured, office and service persons, building and fixtures, contents including gas cylinders, furniture's etc. against accidental personal injury and property damage , insured's liability to his employees under workmen's compensation act and also his liability to third parties and insured's financial loss arising out of any act of infidelity on the part of his employees.
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Lapsed Policy
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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 installment premium payment is extended. When the insured fails to pay the installment on or before the due date, the policy will lapse on the due date.
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Legal Liability
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Financial Liability towards third parties imposed under Civil Law.
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Legal Opinion
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Opinion given by a lawyer in respect of an issue, describing what is legal or lawful.
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Legality of the contract
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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.
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Letter of Transfer (G.A)
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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 shipowner any excess amount of deposit over the actual contribution amount.
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Liability
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Any legally enforceable obligation.
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Liability Insurance
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Insurance designed to protect the policyholder against financial loss due to liability resulting from injuries to other persons or damage to their property.
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Liability Limits
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The sum or sums stipulated in an insurance contract upto which an insurance company is liable to meet the claims made by the insured.
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License
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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.
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License Fee
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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.
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Limit per accident
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Maximum liability of the insurer in respect of all claims arising out of a single accident.
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Mailing List
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Compilation of possible customers prepared as a list for use in direct-mail solicitation.
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Managed Care
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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.
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Marketing and Distribution Risks
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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.
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Mass Communication
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Use of widely circulating media, such as newspapers, magazines, television, and radio to inform the general public
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Master Policy
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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.
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Material Mis-representation
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Misrepresentation of certain facts which will influence the insurer's judgement as regards insurance of a risk and fixing of rates, terms, conditions etc.
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Material Representation
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A representation to the insurer which would affect him in accepting the risk or in rating the premium.
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Named Insured
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Individual, firm, industry or an organization, in whose favor and specific name the policy is issued.
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Negligence
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Failure to use the care that a reasonable and prudent person would have used under the same or similar circumstances.
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Negotiable Instrument
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A document of title to property that may be transferred from one person to another in the course of business.
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Negotiated Settlement
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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.
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Net Loss
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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
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Net Premium
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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.
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Net profit
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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.
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No Cession without Retention
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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.
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No Claim Refund
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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.
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No Cure, No Pay
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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.
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No fault liability
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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
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No Known or Reported Loss
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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.
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Nominee
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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
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Non-Concurrent Policies
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Two or more polcies 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.
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Nonassignable Policy
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Policy which can not be assigned by the insured to another. Normally property and liability policies are not assignable.
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Occupational Disease
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Disease contracted arising out of employment related exposures and conditions. Workmen's Compensation Insurance Policy provides cover against occupational diseases.
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Occupational Hazards
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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.
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Occurrence Basis Policy
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A Liability Insurance Policy that covers Claims arising out of events that occurs during the policy period, regardless of when the claim is filed.
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Off Duty Covers
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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.
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Offer
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Manifestation of willingness to enter into an agreement.
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Offer and Acceptance
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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.
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Offeree
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Person who receives an offer from another. The offeree may accept or reject the offer.
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Package Policy
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A combination of two or more individual coverage into a single policy. A Householder's Comprehensive Insurance Policy, for example, is a package combining property, personnel and liability coverage for the householder.
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Paid Losses
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Total amount of all the losses paid by an insurance company in a given period
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Palletising
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Assembly of one or more packages on a pallet base and properly secured to it.
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Policies issued basis
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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.
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Quarrels and Arbitration
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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.
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Quota Share Treaty
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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
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Rate Guide
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Company manual or prospectus furnishing premium rates for various insurance covers as relating to person, property and peril. This will furnish rates for all insurance policies other than those which are subject to tariff rates. (See "Tariff Rate"). The manual is mainly intended for agents who solicit business and will also contain guidelines for their business procurement.
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Rate of Exchange
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Price of one currency in terms of another.
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Rate of Gross Profit
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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.
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Rate of Premium
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The pricing factor upon which the premium payable for a particular insurance cover will be based
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Rate on GNPI
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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")
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Rate on Line
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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.
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Safety Audits
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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'
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Ultimate Net Loss Clause
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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.
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Ultra Vires
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Beyond power or authority
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Umbrella XL
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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.
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Unallocated Benefit
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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.
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Underlying limit
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A term used in connection with Excess of Loss treaty. The limit upto which the ceding company would bear the loss due to any one cause or event before invoking the recovery from reinsurer.
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Underwriter
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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
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Underwriting
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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.
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Underwriting Loss
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Shortfall that results after payment of claims and expenses against the premium received
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Unfair or misleading advertisement
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"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.
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Valid Contract
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A contract which can be enforced in a court of law.
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Valuation Clause
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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 break up value is to be taken into account.
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Waiting Period
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A period mentioned as 'waiting period' in the policy during which any loss-taking place is not recoverable under the policy.
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Waiver
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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.
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Waiver of Subrogation
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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
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Year of Account basis
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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.
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Yield
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This refers to the ratio that income from an investment bears to the cost/face value of the investment. In the case of a 14% Debenture of face value of Rs.100/-, the income will be Rs.14 per annum on the investment of Rs.100 and hence the yield is 14% if the debenture is acquired at Rs.100. In case the same is acquired at a price of Rs.110, the income in a year will be Rs.14 on an investment of Rs.110 and hence the yield will be 14/110x100. This is called 'current yield' of the investment.
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York-Antwerp Rules
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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.
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