Insurance Glossary

In Marine insurance this is the right of an insured to abandon lost or damaged property and still claim full settlement from an insurer subject to certain restrictions.

In insurance terms, events that are not deliberately caused by the insured and that are not inevitable. Thus, if you deliberately cause damage by driving your car into a tree, the damage is not insured. Similarly, insurers may argue that if you carry out a large excavation in soft soil without appropriate bracing, damage to surrounding property is inevitable and you may not be able to claim any insurance.

Natural occurrence such as earthquake or typhoon. These can be specifically included in most insurance policies contrary to popular opinion.

A professional usually involved in the life insurance industry, who applies mathematical theories of probabilities and statistical techniques in risk calculation. Actuaries are becoming increasingly involved in general insurance in relation to loss reserving and premium calculations.

Sometimes called Special Perils, these may include losses caused by aircraft, explosion, earthquake, storm, tempest, flood, burst water pies, riot, strike, civil commotion, malicious damage. These are extensions that widen the scope of a basic fire insurance policy. Similar extensions may be available for other classes of insurance

Often, the premium on certain policies is based upon estimates of the size of the risk. For example turnover, gross profit or average stock value on your premises over the next twelve months. Under an adjustable policy, these estimates can be adjusted appropriately, upwards or downwards, at the end of the period of insurance, when the actual figures are available.

Business Interruption insurance arranged in advance of the commencement of the insured’s business usually in conjunction with a construction all risks insurance. Cover guards against the potential of a delay in putting a plant into operation, caused by loss or damage affecting the buildings or key items of machinery during construction, erection or testing and commissioning. This type of insurance is expensive and difficult to arrange. It is a core competency of Trafalgar. If you are looking to invest substantially in a business expansion, contact us now.

An insurance salesman linked specifically to a single insurance company on behalf of insurers. Agents often obtain their clients from friends and relatives and therefore tend to have a personal knowledge of the client. Unlike insurance brokers, they rarely have high levels of professional expertise or access to worldwide markets. They also represent insurers and not their clients and can do little to assist in the event of a major claim.

An aggregate total limit on claims during a policy period, which applies in addition to a limit per claim. Often this applies to liability and medical policies.

See ‘Additional Peril’ under a Fire policy. Covers not only the unlikely prospect of a plane crashing into your building, but also damage caused by articles falling from aircraft.

A misleading name for an insurance policy, which provides wide cover but does contain a number of exclusions. The term ‘All Risks’ should not be taken too literally and in some jurisdictions the term is no longer used.
This cover is often used for valuable items such as jewellery and other readily portable items. In Marine Cargo Insurance Institute Cargo Clauses (All Risks) has been replaced by a new easier to understand wording known as Institute Cargo Clauses (ICC) ‘A’

This clause is often found in the Conditions of property insurance policies. Any dispute between insurer and insured in agreeing on the amount or quantum of a claim can be referred to independent arbiters. Most arbitration clauses only apply to dispute over quantum, not to disputes over liability. Arbitration is usually faster and cheaper than going through the Courts.

Professional fees arising from repairing or reinstating damaged buildings are not always automatically covered by insurance policies. This is an extension to cover such costs in respect of building and machinery.

‘Average’ has several meanings in the insurance industry.
In Marine insurance, ‘average’ means loss and ‘particular average’ means partial loss. See also ‘General Average’.
If a policy is ‘subject to average’, then, if the sum insured at the time of a loss is less than the actual value of the property insured, then the amount of claimed under the policy will be reduced in proportion to the underinsurance. In mathematical terms:
Allowable Claim = Loss x Sum Insured
Value at risk
If you do not insure for the full values at risk, then you may not be able to obtain a full settlement of any loss. See also “First Loss”.

Bailee’s Liability insurance covers the bailee’s legal liability for loss, destruction or damage to property whilst in the bailee’s care. As an example, clothes being cleaned are under the temporary control of the bailee (laundry). The bailor (owner) expects the clothes to be returned in good condition. If the clothes are stolen from the cleaners, the bailee’s Liability insurance would cover the liability of the laundry for the loss.

A wide form of insurance for Banks, which covers Theft and Fidelity risks.

Livestock insurance for horses kept for racing and breeding purposes providing ‘life and health’ cover.

Boilers and other vessels such as economisers, super-heaters and steam piping are subject to internal pressure and can explode or collapse. A boiler policy can cover explosion and collapse or be extended to cover any type of breakdown. Cover is often extended to cover damage to surrounding property and third party liability arising from explosion or collapse.

These are a guarantee issued by a bank or insurance company that an individual or company will meet various obligations.
Under a construction contract a contractor may be required to obtain:

• A bid bond: This will protect the developer against the failure of the contractor to proceed with a project at his bid price.
• Prepayment bond: This guarantees any advance payment made by the developer for the contractor’s mobilisation.
• Performance bond: This guarantees that the contractor carries out the project properly and the developer will be compensated for any breach of contract.
• Retention bond: Often a developer will retain a small amount from the contract price for a period to ensure that any defects in the project discovered after completion are corrected in a timely manner. This can adversely affect the contractor’s liquidity. A retention bond will guarantee that any corrective work is carried out and allow the developer to settle in full with the contractor immediately the project is complete.

Other bonds may also be required in business, such as customs bond.

Also known as Accounts Receivable insurance, this covers any debit balances that you are unable to collect because the books have been destroyed. Backup records obviate the need for this cover.

In insurance, a professional intermediary representing the client’s interests, not the interests of the insurance company. The professional standards of insurance brokers varies from country to country and from firm to firm. For truly professional advice, some research regarding their levels of expertise and experience may be necessary.
Trafalgar is among the largest insurance brokers in Thailand and can offer truly professional advice to clients on a wide spectrum of risk related issues.

A marine policy that covers a ship during construction until possession passes to owners.

An outdated legal term referring to theft involving forcible or violent entry to or exit from the premises.

See ‘Additional Peril’ under a fire policy. This covers damage resulting from a plumbing accident but does not strictly cover the cost of repairing the burst tank or pipe. Often household insurers will settle a claim in full, including the damage to the tank or pipe.

An insurance policy covering a business will only provide cover in respect of the ‘businesses’ described in the policy.

See also ‘Consequential Loss’ or ‘Loss of Profits’ insurance. This insurance is intended to maintain the profit from your business at budgeted levels even though revenue may be adversely effected an insured catastrophe. For example, if a factory is badly damaged in a fire, the owner may expect insurers to pay the cost of replacing the building and equipment. However, work may take 12 months or more to complete and during this period, the factory will not be able to continue production and will produce no revenue. Costs such as payroll, etc may well continue and shareholders will still wish to receive a dividend from their investment. A business interruption policy will ensure that ongoing expenses are paid and profits are maintained.
Correctly setting up a business interruption policy can be complicated. Premiums will vary greatly with the ability of a business to function after a loss has occurred. Professional advice from Trafalgar is essential to ensure appropriate protection and competitive premiums

Travel insurance, provides companies and their employees with a variety of covers raging from damage to baggage, loss of deposits on flights and hotels, liability, loss of cash, tickets or passports to the cost of further airfares to send a replacement if an executive travelling abroad falls ill.

With a few exceptions, notable construction insurance policies, insurers have the right to cancel a policy at any time. If they do so they must give the period of notice required stated in the policy and refund a pro-rata premium. If the insured cancels, then insurers may charge short period rates which will cost considerably more.

This is an in-house insurance company used by a corporation to insure the risks of the parent company. There may be significant tax advantages in locating a captive off-shore or the parent company may experience difficulty with the traditional insurance market’s reluctance to underwrite certain hazardous types of risk.

This is usually covered under a Marine Insurance policy, whether for domestic or international journeys, by sea, air or land. There are three internationally recognised types of cover, known as ‘Institute Cargo Clauses A, B and C’. These have replaced three old covers with antiquated wordings known as All Risks, With Average (WA) and Free of Particular Average (FPA).

A piece of paper not to be confused with an insurance policy. It is issued mainly to comply with certain statutory requirements as evidence of cover. A certificate is issued to motor vehicle owners and also to employers under Workman’s Compensation laws. Another type of certificate can be issued under a Marine Cargo Open Cover as evidence that Cargo insurance has indeed been arranged.

The UK based insurance education body, which also operates through world-wide affiliates. This is the main professional examining body for the insurance industry outside the USA. Insurance personnel who have passed their insurance examinations can qualify as Associates or Fellows of the Institute.

In many British-type insurance markets, co-insurance means the sharing of one insurance policy between two or more insurers. Usually, this entails each insurer paying directly to the insured their respective share of the loss. In other words, the insured has an insurance contract with more than one insurer. This arrangement is cumbersome to administer and is used only on very large risks.

Cover that can be purchased by someone renting a car where the rental company waives any right to recover the amount of damage to the car from the individual regardless of fault.

A relatively new type of insurance specially geared to cover delicate and high value computer equipment. Cover is usually on an All Risks basis and can be extended to include the costs of reinstating data, and business interruption cover such as increased costs of working, or loss of revenue/gross profit.

Cover for these is often not available under basic Fire and Burglary policies. You can either extend your cover specifically to protect such records or, alternatively take out a special Computer insurance.

A special policy taken out by owners or management corporations designed to cover the buildings of a condominium, sometimes carrying other benefits, such as Liability insurance for the management corporation or committee, plus Errors and Omissions cover.

An alternative name for Business Interruption or Loss of Profits insurance.

Partial loss of such significance that the cost of restoring damaged property would exceed its value after restoration. For example, a car is so badly damaged by fire that repairing it would cost more than the repaired vehicle would be worth.

This is where a liability is incurred by a business for acts other than those of its own employees. If an independent contractor is hired to carry out some work, then the business may be held liable for the negligent acts of the contractor if the contractor is acting under the direction or control of an employee of the business.

Property insurance that restores the insured to his original financial condition after suffering a loss. The idea is that the insured cannot profit by his misfortune. Personal Accident insurance, where a pre-agreed lump sum payment is made, is not a Contract of Indemnity.

Sometimes called ‘Contract Works Insurance’, this is an insurance policy which covers contract works, such as new buildings in the course of construction, and engineering projects, on an All Risks basis. This policy would usually include Public Liability cover as well. It is often arranged in the joint names of the principal and the contractors.

Where someone is holding two or more insurance policies covering the same interest in the same property for the same peril, and if the policies are contracts of indemnity, then the law does not allow the insured to recover a loss under both policies and so make a profit out of the misfortune he has insured against. Instead, the insurers concerned share in the loss proportionately. This is known as contribution.

A principal of law recognising that injured persons may have contributed to their own injury. For example, by agreeing to be a passenger in a car being driven by someone that you know to be drunk. If you are subsequently injured you may be said to have been contributorily negligent.

If you import or export your goods on a ‘CIF’ basis, then insurance is included in the deal. ‘C & F’ excludes insurance – in this case, the buyer has to make his own insurance arrangements.

Covers various growing crops in the event of loss or damage caused by insured perils, notably fire, flood or hail storm. In many countries this is available through government bodies.

If an insurance company issues a Bond, then it will usually ask for either cash collateral or a counter guarantee from a surety or directors of the company to whom it issues the Bond. If insurers make payment, then redress will be sought against such sureties under a counter guarantee.

The basic cover under a fire or industrial all risks policy does not automatically extend to include the cost of removing debris, shoring up buildings or dismantling machinery. These costs are insured under a separate “debris removal” clause. It is important to note that the standard debris removal clause does not extend to cover the removal of stock debris.

See adjustable policies

The amount of any claim which is the responsibility of the Insured and which the insurer will deduct from any claim payment. Often this is referred to as an excess. Sometimes deductibles are voluntary and a premium discount allowed. Sometimes they are imposed by insurers as an underwriting requirement to avoid large numbers of small claims and their associated administration costs.

Demurrage is the loss of use a vessel owner incurs if his vessel is restricted to port as a result of damage to the vessel or delays in loading or unloading.

A company’s business could be affected by a nearby fire (or other loss) which restricts access to the company’s premises. As a result, although the company’s own premises are undamaged, they suffer a reduction in turnover and a loss of gross profit. This type of loss is not covered under a basic business interruption policy but can be covered if the policy is appropriately extended.

A public liability policy provides cover for liabilities an Insured may incur as a result of business activities. This policy may be extended to include “goods sold or supplied” or “products liability”. Even when so extended, a basic policy will not cover losses incurred by third parties due to the defective design in the products. To provide such defective design cover a further design extension is required.

Multi-national companies often arrange their insurance programme centrally on a global basis so that the risk manager will know exactly what levels of cover operate and can ensure these offer appropriate cover for the organisation. However, the legislation in individual countries, the existence of joint venture partners or other circumstances may require local insurance to be arranged. In such circumstances, the global programme will cease to operate for those risks covered by the local policy, but will continue to operate for those areas not covered by the local programme but included in the global programme. If the standard of the cover is different, then the “top-up” cover provided by the global programme is called Difference in Conditions Insurance. If the sum insured or policy limits are different, then the “top-up” cover provided by the global programme is called Difference in Limits Insurance.

Legislation in many countries makes directors and senior officers personally responsible for wrongful acts they commit as representatives of the company. If poor management decisions are made and the company loses business, if investors are given inaccurate information or if an employee believes he has been unfairly dismissed, personal action may be taken and the company may be prohibited from paying costs or damages on the directors behalf. Extremely large personal claims have been seen in the USA and they are becoming more frequent in Asia. For more information on Directors and Officers Insurance, see our separate article.”

Although laws vary greatly, it is now a criminal offence in most countries to drive while under the influence of alcohol or drugs. However, not only do you commit a criminal offence, but if you should have an accident while driving under the influence of alcohol or drugs you will find your insurer will refuse to settle your insurance claim.

See Business Interruption. Payroll is normally included as part of the Gross Profit insured under a business interruption policy. In some cases however, an Insured may feel it unnecessary to insure full payroll and wish to insure on a more restricted basis. Dual basis payroll cover allows the Insured to cover 100% of payroll for an agreed initial period say three months with cover then dropping to say 25% of payroll. This allows the Insured to perhaps pay all appropriate redundancy money to staff as they are laid off following a catastrophic loss, but to retain certain key staff (in this case up to 25% of the payroll) until the business is fully recovered. Dual basis also allows an “option to consolidate”. If this option is elected, the Insured can extend the initial period of full cover by a small additional period after which all cover for payroll ceases.
Dual basis cover provides a flexible and low cost method of insuring payroll. It does however provide only partial cover.

See ‘Additional Peril’ under a Fire policy.

The date upon which cover under an insurance policy becomes effective. Usually this will not be until an insurer has accepted the proposal and confirmed cover in writing by issuing a cover note or cover confirmation.

The legal rights of an employee are usually defined in law under a country’s Employment Code or Workmen’s Compensation Acts. Usually these laws provide for certain fixed sums to be paid by a government body to an employee if the employee is injured in the course of his work. The sums are usually funded by a government levy imposed upon all employers. This may be the only compensation employees are entitled to and is usually payable without any need to prove negligence on the part of the employer. However, in some territories it is possible for the employee to take legal action in common law to recover damages for injury if the accident occurred as a result of the negligence of the employer. Negligence on the part of the employer could come about for example by the employer providing unsafe equipment, an unsafe system of work or perhaps through the negligence of another employee.
Any damages awarded and the legal costs of defending any claim can be covered under an Employer’s Liability Policy.

Also known as Machinery Breakdown or Plant All Risks Insurance, this type of insurance provides very broad cover for damage to electrical and mechanical machinery.

An endorsement is a special amendment to a policy wording. It may be attached to the policy from inception or it may be added to the policy mid term. Mid term endorsements are often issued at the request of the Insured. For example an endorsement may be issued to note a change of address of the Insured.

An erection all risks policy offers cover very similar to a contractors all risks or construction all risks policy. It is however aimed more at erection of plant and machinery rather than the construction of buildings.

Engineers, architects, lawyers, accountants and even insurance brokers hold themselves out as professionals capable of offering accurate and well considered advice. If they fail in their duty to provide “best” advice they leave themselves exposed to claims for errors and omissions or professional negligence. There have been some spectacular claims in recent years with accountants failing to provide accurate reports on the financial status of companies, which are involved in takeovers. Losses also occur when insurance brokers fail to properly carryout instructions of their client and perhaps leave parts of the client’s business uninsured. For this reason you should always ensure that your insurance broker carries appropriate levels of Errors and Omissions or Professional Indemnity insurance.
At Trafalgar International we offer a professional service from a highly qualified team but we know that mistakes can happen. To protect your business and ours we carry appropriate levels of insurance

The amount of any claim which is the responsibility of the Insured and which the insurer will deduct from any claim payment. Often this is referred to as a deductible. Sometimes excesses are voluntary and a premium discount allowed. Sometimes they are imposed by insurers as an underwriting requirement to avoid large numbers of small claims and their associated administration costs.

Insurance companies can rarely bear a total loss on the business that is offered to them. They usually choose to share the risk with other insurers through co-insurance or re-insurance. Excess of Loss Reinsurance is a form of reinsurance whereby the original insurer decides the amount that it is prepared to bear on any one loss, and the reinsurer pays the amount of any claim in excess of this retention.

Also known as Exceptions. All contracts contain certain conditions and it is important that you are aware how these affect your rights under a contract. An insurance policy is no different in this respect. You should review any policy with your professional adviser to fully understand what areas are covered and what claims will not be paid.
Some exclusions are very standard for example, war risks on land, nuclear radiation and the deliberate acts of the Insured. However some are imposed in exchange for premium discounts for example health insurance may exclude elective treatment in the USA where medical costs are very expensive.

A claim settlement made by an insurer even when the loss is not covered by the policy. Usually made for commercial reasons where the claims experience has otherwise been good.

Costs incurred in returning a business to its normal trading status in the minimum possible time, following a loss for example, overtime, express freight and premium prices paid to secure replacement plant at short notice. Expediting expenses are not automatically covered and your policy should be appropriately extended.

See ‘Additional Peril’ under a Fire policy. A standard fire policy usually insures against fire that results from an explosion, but not the shock and concussion damage that can result. This should be covered under an explosion extension. UK policies do extend to include shock damage caused by explosion of domestic boilers and gas used for domestic purposes.

See “Trade Credit Insurance

See Political Risks Insurance

Insurance companies can rarely bear a total loss on the business that is offered to them. They usually choose to share the risk with other insurers through co-insurance or re-insurance. Facultative Reinsurance is a form of reinsurance whereby the original insurer decides what level of risk it is prepared to retain on any one policy and offers to share the risk (for a premium) with a reinsurer. The reinsurer will then decide whether the reinsurance premium is adequate and how much of the risk he wishes to reinsure, according to the merits of the individual case. See also Treaty Reinsurance.

An all risks, theft or burglary policy will usually exclude losses due to theft by people legally on the premises. This obviously excludes losses caused by employee theft. Such losses are covered under a Fidelity Guarantee policy. Usually such policies are subject to deductibles or coinsurance by the Insured to ensure that recruiting policies are maintained and references properly followed up.

A limited form of cover for motor vehicles offered as an extension to a basic third party only policy

Depending upon the individual territory, a standard Fire policy usually covers fire, lightning and explosion of gas or boilers used for domestic purposes. Fire means “actual ignition”. Scorching or charring is not covered. Cover will sometimes extend to cover fire arising from any cause, but more often it is subject to policy exclusions for example fire damage caused by a riot may not be covered unless the policy is extended to include Riot. It is important to consult you insurance professional, Trafalgar International to be sure you have the correct level of cover.
A fire policy is usually extended to include Additional Perils.

This is a form of partial insurance where the Insured decides he could not suffer a total loss and selects a maximum sum to insure for any loss. First Loss Policies are often used in Theft insurance high-value goods which would be physically impossible to steal in a single burglary. It is most important that first loss sums insured are only used on first loss policies where “Average” does not apply. Otherwise the sum insured should represent the full value or you will not obtain a full settlement of any loss.

A single policy covering a number of vehicles usually issued to a company operating a large fleet of vehicles. Premiums are usually calculated on the basis of historic claims or a straight discount allowed for the reduced administration costs in combining several policies into one.

See ‘Additional Peril’ under a Fire policy.

“FOB” or Free on Board is a contractual basis for the sale of goods internationally. On an FOB basis the seller’s interest in the goods ceases when they are loaded onboard the carrying vessel. This is usually an appropriate time, as the ship’s representative will normally inspect the goods on loading to ensure they are in good condition and record any damage. Once loaded onboard the carrying vessel, the buyer takes over responsibility for the goods and is responsible for any necessary insurance.

A franchise is similar to a deductible in that the insurer makes no settlement if the total claim is below the franchise figure. However, if the claim is above the franchise figure, the claim is paid in full. Franchises are very unusual in modern insurance practice though machinery breakdown covers sometimes use time franchises.

Particular Average means partial loss so Free of Particular Average means excluding partial losses or Total Loss only. FPA is a set of marine cargo insurance conditions providing very narrow cover (though not limited to total loss only!). FPA conditions have now generally been replaced by the more modern “Institute Cargo Clauses C”.

Most Theft or Burglary policies cover theft only if it involves forcible or violent entry to or exit from the premises. Full theft cover extends this cover to any dishonest appropriation. Full theft cover is not normally available to shops or hotels, which are susceptible to casual theft.

In some territories this may mean merely an insurance agency involved in all types of insurance. In other territories it may mean an insurance agency for an overseas insurer and empowered to underwrite risks and settle claims on behalf of that insurer.

In order to save a ship in peril of sinking during a storm, some of the cargo may have to be thrown overboard. The ship owner and the owners of the saved cargo obviously benefit at the expense of the owners of the jettisoned cargo. This was deemed unfair and the principal of “General Average” evolved so that all parties would contribute in such a situation.
Thus if you ship cargo on a vessel that is involved in a loss, you may face a claim against you even though your goods are undamaged. Luckily, your marine insurance policy, if properly arranged, will protect in such cases where General Average is declared

Insurance practice has developed over many years in many territories and been added to and amended by the courts or governments. However certain basic principles have been established as the basis on which insurance is written and operates. These principles include Indemnity and its corollaries Contribution and Subrogation, Utmost Good Faith and Proximate Cause.

See territorial limits

Glass insurance is normally provided as part of a package policy for shops and other small risks but can be obtained a separate policy. The policy covers breakage of fixed glass from any cause but normally excludes damage to frames.

A sportsman’s package policy which covers loss of or damage to golfing equipment, liability to third parties, personal accident and entertainment expenses incurred at the 19th hole celebrating that elusive “hole in one”. Cover is available as part of the Trafalgar International Domestic Insurance Programme. Click here for further information.

Property, especially stock, does not necessarily remain at your premises alone. It moves around the country and maybe internationally to be delivered from suppliers or to customers. Goods in Transit insurance provides cover for inland transit by road or rail and often extends to include inland and coastal waters. Cover may be arranged by the owner or by the haulier to protect him against his liabilities under the haulage contract.
International transit by sea or air is insured under a Marine policy.

The sum insured under a Business Interruption insurance. Your accountant may regard Gross Profit as being profit before tax, but this is not the insurance definition. Your broker should check through your management reports to ensure that the gross profit is properly defined to protect your business and that you have given your insurer the correct figures.
Gross profit is normally defined by insurers as the amount by which the sum of the turnover and the closing stock shall exceed the sum of the opening stock and the uninsured working expenses. These uninsured working expenses vary from one business to another and should be specified in the policy.
Arranging business interruption insurance correctly and at best terms is a core competency of Trafalgar International. Contact us now if you want to ensure your business interests are properly protected.

An agreement amending the Warsaw Convention Limits relating to an airline operator’s liability to passengers and goods carried by air.

Referred to in Bills of Lading, the Hague Visby Rules set out the conditions upon which goods are carried by and the obligations and responsibilities of the carrier and ship.

Hazard is another word for risk. Insurers often separate risk into two areas: the physical hazard and the moral hazard.
Physical hazard refers to the physical aspects of the risk that could make a loss more or less likely, or affect the severity of that loss. Moral hazard on the other hand refers to the attitude and conduct of the Insured himself. While physical hazard can nearly always be addressed by insurers through recommended risk improvements, policy conditions and premium rate, moral hazard can only be addressed by declining the risk absolutely.

As the term suggests, HPR risks are those risks that are of the highest quality in terms of physical hazard. Both frequency and severity of loss will have been addressed by the installation of sprinkler systems, haylon systems, water hydrants and fire and smoke alarms. HPR risks enjoy a low premium rating.

Hiring contracts for plant and equipment usually make the hirer-in totally liable for any damage to the plant from the time the plant leaves the hirer-out’s premises until the time it is returned unless it can be shown that a loss is due to bad maintenance by the hirer-out. The hirer-in should therefore arrange appropriate insurance under a hired-in plant policy. This can usually be arranged on an annual basis with the premium based on a percentage of annual hiring charges. An existing policy for owned plant may normally be endorsed to cover any sums you become legally liable to pay under the hiring agreement.
If you do hire in mobile plant, you must insure the road traffic act liabilities if the plant is to be used on the public road

If you hire premises for meetings, you may be responsible to the owners under the hire contract with them. The contract wording should be checked carefully and your Public Liability policy extended to include the risk of damage to property in your custody or control.”

Your legal liability arising from the operation of lifts or hoists may be excluded from your public liability policy. Check the wording carefully to ensure cover is adequate or ask Trafalgar International for a full risk management review of you operations. Machinery Breakdown insurance is available to cover unforeseen damage to lifts and hoists

By tradition a golfer will buy drinks at the 19th hole (the clubhouse) to celebrate a hole-in-one. A golfer’s policy normally includes cover for these entertainment expenses up to a certain limit. Trafalgar International’s domestic insurance package can provide cover for those “hole in one” obligations and a wide range of other domestic insurance needs. Click here for details.

Household or domestic insurance policies provide a wide range of personal insurance cover. Trafalgar International have negotiated very competitive terms for such insurance ad would be delighted to discuss your personal insurance needs with you.

Ships or “Hulls”, like cargo, are insured under marine insurance policies usually based on “Marine Institute Clauses”. In the case of ships, the normal basis of cover is Institute Time Clauses – Hulls. The Institute Clauses are complicated, old-fashioned wordings which, though often difficult to understand by the layman, have been subject to numerous legal precedents and the extent of the liability of insurers in almost all situations has been firmly established

See ‘Additional Peril’ under a Fire policy. Impact covers damage to property by any road vehicle and often by animals as well. Wordings used to exclude damage caused by the Insured’s own vehicles.

Certain policy conditions are not actually written into the policy but that have evolved from basic insurance principles over the years. For instance, the insurance cannot cover illegal operations and there must be an insurable interest in any insured property.

Increased costs may be incurred by an Insured in trying to maintain turnover following an insured loss. Such costs, with certain limits can be insured under a Business Interruption Policy.

Indemnity is one of the basic principles of insurance and has been legally defined on several occasions. It states that the Insured should not profit by any claim, but should be returned to as near as possible the same financial position as he would have been had the loss not occurred.
Certain policies are not subject to the principle of indemnity, notably Personal Accident and Life policies with fixed sums insured. The modern approach of “reinstatement” and “new for old” covers put the Insured in a financial better position, but this is justified by the fact that second-hand replacement items may not be readily available.

Index Linked Policies increase sums insured automatically at renewal by the amount of a given index.

Also known as Industrial Special Risks, IAR or ISR policies offer wider cover than property covers written on a fire and allied perils basis. While accidental damage cover is given in addition to the fire and allied perils, the main difference is probably the difference in the way cover is described. Under a fire and allied perils policy, the wording defines exactly what perils are covered. Under an IAR policy everything is covered other than the exclusions, defined in the wording.
IAR policies are usually available only to especially large accounts.

Certain goods are, by their very nature susceptible to damage and it would be unreasonable to expect insurers to pay for such damage. Examples of inherent vice are would be deterioration of imperfectly cured skins, spontaneous fermentation or combustion of improperly dried grain.

Certain Medical Expenses policies are restricted to expenses incurred during hospitalisation and do not cover out-patient care. Such policies are said to provide In-Patient Cover only.

The cover under a Marine Cargo policy is defined by standard policy wordings issued by the Institute of London Underwriters (or the American Institute of Marine Underwriters). These are called Institute Cargo Clauses. While there are numerous clauses and different clauses will apply to different cargoes, normally the widest cover is provided under Institute Cargo Clauses A with more restrictive cover under, Institute Cargo Clauses B and Institute Cargo Clauses C. These new clauses replaced the previous Institute Cargo Clauses All Risks, With Average (WA) and Free of Particular Average (FPA).

Insurable Interest is one of the basic principles of insurance. It states that the Insured must have a financial interest in the property insured such that he benefits from its continued existence and will be prejudiced by its loss or damage. This basically differentiates insurance from gambling. The insurance policy insures the interest of the policyholder in the property. If there is no insurable interest, the policy will not respond.
Many legal precedents have been seen relating to insurable interest and when it must be effective. With life insurance an insurable interest must be present when a policy is arranged but not necessarily when a claim occurs, with marine insurance an insurable interest must be present when a claim occurs but not necessarily when a policy is arranged and with most other insurance arrangements an insurable interest must be present when a policy is arranged and when a claim occurs.

The insurance industry uses intermediaries to introduce clients to insurers and to provide day to day servicing of a client’s insurance needs. The intermediary may be an international insurance broker offering a wide range of professional risk management services and access to world wide markets or he may be a part time tied agent acting purely as a commission agent. Trafalgar International are among the largest insurance brokers in Thailand and can offer access to international markets and a highly professional insurance service.

A Marine Insurance term referring to the throwing of cargo overboard to lighten the ship in order to save it from sinking. Jettison is one of the many perils covered under Institute Cargo Clauses A, B and C.

An all risks policy offering very wide cover for jewellers and similar shops and for manufacturers of jewellery.

Your personal jewellery can best be insured under an all risks section of a domestic insurance policy. Trafalgar International have developed a specialist policy for your domestic insurance.

Jurisdiction means the legal environment which will apply to a contract of insurance. A jurisdiction clause is often endorsed on Liability policies so that they will respond only to an action brought under a particular jurisdiction. Most commonly jurisdiction of USA and Canada would be excluded.

Insurance can be purchased by individuals or companies worried about their key executives to cover ransom demanded by kidnappers. Most policies also cover professional advice and independent negotiators to remove emotion from negotiation with the kidnappers. The negotiators sole objective is to secure the release of the victim. This is a very specialist insurance product where confidentiality is obviously very important.

An agreement between two insurance companies whereby each insurer pays the vehicle’s repair costs of its own policy-holder regardless of who was responsible for an accident. While an insurer may be able to pursue a recovery from the party responsible for an accident of from his insurer, this is a costly administrative procedure. The Knock for Knock Agreement simplifies recovery claims among insurers and the cost is seen to balance out over a long period of time.

Your policy will lapse or expire if you fail to pay the renewal premium.

Public Liability policies include cover for legal costs and expenses incurred by the Insured with his insurers’ consent or recovered by any claimant against the Insured.
Policies are now available to cover legal services in certain circumstances. For example, recovery of uninsured expenses following a motor accident or legal costs to evict a tenant who refuses to move out at the expiry of the lease.

Liability at law can arise under tort (or civil actions) or under contract. While settlements are often made out of court by mutual agreement, legal liability can only be finally decided by the courts. Public, Products Professional Liability, Directors and Officers and other Third Party Liability insurance would normally cover only non-contractual obligations.

Covers Legal Liability to third parties, including legal costs

A standard Fire policy will automatically cover damage to property caused by fire, lightning or certain types of explosion.

Liability policies normally contain a limit stating the maximum amount insurers will pay for any single event and perhaps for all events occurring in a single policy period. Limits should be carefully reviewed to ensure they are sufficient.

Liquidators take on onerous responsibilities when they take over a company for liquidation, as they are responsible for maximising creditors’ recovery and can face legal action if they do not act in a proper professional manner. If for example uninsured property was destroyed following a fire, the liquidator could be held responsible, as he had not protected the property with insurance. This situation can be a serious problem as many insurance policies laps automatically if the Insured becomes bankrupt or enters into an agreement with creditors. Special insurance packages can be arranged to protect liquidators by covering property, liability and business interruption risks immediately the liquidator becomes responsible. Cover is automatic and premiums calculated upon declaration of the details of the individual risks.

A life insurance policy for animals, usually horses other than thoroughbred race horses, cows, bulls etc.

This is the world’s oldest and most famous insurance market, attended by Lloyds brokers and Lloyds underwriters. Lloyds started in a London coffee-house frequented by ship owners in the seventeenth century.

While there are exceptions, insurance policies normally run for a period of one year only. Insurers will however offer a small discount if you undertake to offer the renewal to them for a period of three years at the same terms. LTAs are no longer common as insurance rates have fallen dramatically in recent years.

Loss Adjusters are independent firms, dealing with the investigation and settlement of insurance claims. They are generally highly qualified and experienced operations that can fully understand the details of the Insured’s loss and he insurance policy cover. Although insurers pay their fees loss adjusters are impartial. Loss adjusters should not be confused with loss assessors who are employed by the Insured to represent them in a claim recovery.

See Business Interruption.

If you are involved in an accident you may have to hire a replacement vehicle. Standard Motor policies do not include cover for such costs but cover is available from specialist companies in certain territories. If the accident is cause by someone else it may be possible to claim loss of use from the other party or his insurers.

The ratio of losses paid and outstanding to premiums. A low loss ration means the insurance is profitable to the underwriter. Bear in mind however that the insurance company must cover commissions and administration costs as well as claims.

Complex industrial plant and simple office machinery can be insured not only for fire and allied perils, but also for any accidental damage including mechanical or electrical derangement. Such cover is usually subject to certain levels of maintenance being maintained and is almost certainly subject to a significant deductible. For industrial plant business interruption following breakdown is also usually insured.

The Maintenance Period is the period following completion of a construction project during which the contractor is responsible for certain maintenance issues under the many building or engineering contracts. During this period, the contractor needs to maintain insurance in force, the extent of which will depend on the contract and on his own concern for the risk he is facing. Normally the maintenance period will last for twelve months from the completion of the contract but this may be longer or shorter. Differing levels of cover are available (visits maintenance, extended maintenance guarantee maintenance) depending upon the specifics of the particular contract.

See ‘Additional Peril’ under a Fire policy. Cover against malicious damage provides cover against damage caused by ‘malicious persons’ and is usually only available as part of a riot and strike extension.

Engineers, architects, lawyers, accountants, insurance brokers and the like carry professional indemnity or errors and omission insurance. Doctors, nurses, surgeons and hospitals require the same type of cover, but refer to it as malpractice insurance.

Marine insurance refers to much more than the insurance of ships. The insurance market tends to divide into three areas: Life, Marine and Non-Marine. Marine insurance will include the insurance of hulls, the cargo they carry, liabilities that may devolve upon ships and ship operators, known as “protection and indemnity” and also the insurance of wharves, ports and harbours, container terminals and even oil platforms and drilling rigs.

All Business Interruption policies contain a requirement that a Material Damage policy remains in force at all times to protect the property, which is the subject of the business interruption policy. This is usually a Fire policy, an Industrial All Risks policy or a machinery breakdown policy. This is to ensure that in the event of a loss, funds are available to repair the damage and thus minimise the period during which the business will be interrupted.
It is important to note that as a result of the material damage proviso, older style wordings may exclude cover under a business interruption policy where the material damage falls below the material damage deductible. Special care is needed and we recommend strongly that your insurance experts, Trafalgar International be consulted.

The principle of “utmost good faith” requires anyone seeking insurance to disclose all the material facts about the risk that he knows, or should know. A material fact has been defined in a number of legal cases and broadly is “any fact which may influence the judgement of a prudent underwriter in deciding whether to accept a risk and if so at what rate of premium.” How do you as an Insured know what an underwriter may regard as ‘material’? If in doubt as to whether some piece of information is relevant, tell insurers anyway. While the law has softened in favour of the Insured in many territories, it is still normally possible for the insurer to turn away any claim if there has been a breach of utmost good faith i.e. material facts have been withheld by the Insured

The Maximum Indemnity Period is a limit under a business interruption policy relating to the maximum period over which the insurer will pay for loss of profit. It is the responsibility of the Insured to decide upon the Maximum Indemnity Period and if the period chosen is inadequate, it can have a very serious effect on the Insured’s business. Professional advice is necessary in deciding this issue and we recommend you contact your professional advisors, Trafalgar International.

There is no fixed definition for this term, which tends to mean slightly different things to different insurers. It is used along with Estimated Maximum Loss (EML) and Maximum Possible Loss to refer to the largest loss likely, possible or probable under any given insurance policy.

An absolute must for expatriates where medical facilities may not be as modern or as reliable as they are at home. Trafalgar International are experts in this area and operate a number of programmes which can be tailor made to any situation.

Moral Hazard

See “Hazard”. Moral hazard hand refers to the attitude and conduct of the Insured.

Refers to the individual underwriters, or members, at Lloyd’s of London traditionally known as “Names”.

Gross claims less reinsurance recoveries.

The amount of the premium that is left after the subtraction of some or all permitted deductions such as brokerage and (for certain types of business) profit commission.

A type of reinsurance in which the reinsurer does not share similar proportions of the premiums earned and the claims incurred by the reassured plus certain associated expenses. Compare proportional reinsurance. Excess of loss reinsurance is an example of non-proportional reinsurance.

Insurance business that may be offered to and placed with any managing agent that is willing to underwrite it on behalf of its managed syndicate. It excludes business that is underwritten pursuant to a binding authority.

This refers to the communication by a broker to an underwriter of a client’s acceptance of his quotation. It can also mean the amount of the sum insured that is covered by a particular slip where more than one slip is used to arrange cover.

The reinsurance of a syndicate or of an insurance company as distinct from inwards reinsurance.

A commission that is paid by a reinsurer to the reassured to cover the latter’s overheads in administering the reinsurance.

A partial loss of a ship or cargo which is caused by an insured peril and which is not a general average loss. The term partial loss may be used instead.

A harmful event which may be covered under a contract of insurance or reinsurance as an insured peril or excluded from it.

Personal Accident insurance or PA provides for the payment of specified sums in the event that the insured suffers some bodily injury as a result of an accident. In Thailand the level of coverage offered locally for PA is typically not more than Baht 5 million, however, it is relatively inexpensive. Trafalgar can provide you with alternatives from a number of different providers.

Insurance which is sold to individual consumers such as buildings, contents and travel insurance. This term is used in contrast to commercial lines. Trafalgar offers the entire range of personal insurances and we can help you find the right policy to protect your home, your car, and your health.

Where a broker effects an insurance or reinsurance contract with underwriters on behalf of its client.

This term may refer to an individual broker or a broking firm that places cover directly with one or more underwriters. Compare producing broker.

See slip.

The wording of a contract of insurance or reinsurance.

The person who is insured under a contract of insurance.

Another term for limit of indemnity. It refers to the maximum amount payable under a policy of insurance or reinsurance, either overall or with reference to a particular section of the policy.

The amount charged by an insurer or reinsurer as the price of granting insurance or reinsurance cover.

When an insurance contract is terminated mid-term by an insurer, the return premium will usually be calculated on a pro rata basis. For example this means that if a 12 month contract is cancelled 4 months before its expected expiry date then the insured would receive back 4/12 of its premium.

This term may refer to (a) the individual broker who obtains a proposal for insurance or reinsurance for the broking firm for which he works; or (b) a broking firm or individual broker that is responsible for introducing a proposal for insurance or reinsurance to another broking firm. The original producing broker will be the person who deals directly with the client. The term producing broker is often used in contrast to the term of placing broker although it is common for individual brokers and broking firms to undertake both functions.

A type of reinsurance in which the reinsurer shares similar proportions of the premiums earned and the claims incurred by the reassured plus certain associated expenses. Compare non-proportional reinsurance. Quota share treaties and surplus line treaties are examples of proportional reinsurance.

A standard form which is prepared by an insurer and which contains a number of questions which a person seeking insurance is required to answer for the purpose of enabling the insurer to decide whether or not it is willing to grant cover and, if so, the terms on such cover.

A person who seeks insurance

An insurer will only be liable to pay a claim under an insurance contract if the loss that gives rise to the claim was proximately caused by an insured peril. This means that the loss must be directly attributed to an insured peril without any break in the chain of causation.

Latin for amount. Where an insured or reassured makes a claim it must first be established whether the insurer or reinsurer is legally liable to pay the claim If the insurer or reinsurer is liable to pay the claim it must then be established how much is the insurer must pay. For example, there may be deductions for an excess, under insurance or depreciation.

A reinsurance treaty which provides that the reassured shall cede to the reinsurer a specified percentage of all the premiums that it receives in respect of a given section or all of its underwriting account for a given period in return for which the reinsurer is obliged to pay the same percentage of any claims and specified expenses arising on the reinsured account.

A statement of the premium that an underwriter requires to underwrite an insurance/ reinsurance risk based on the information supplied by the person seeking cover, either directly or via their broker. A quotation may be conditional, eg it may be subject to the provision of further information, or not. If a quotation is accepted before it is withdrawn, then subject to the satisfaction of any conditions that may attach to the quotation, an insurance/reinsurance contract will be made.

The premium expressed as a percentage of the sum insured or limit of indemnity.

The restoration of cover following its exhaustion as a result of a loss by payment of an additional (reinstatement) premium. Many reinsurances provide for one or more automatic reinstatement of covers.

A contract under which a reinsurer agrees to pay specified types and amounts of underwriting loss incurred by an insurer or another reinsurer in return for a premium. Reinsurance serves to ‘lay-off’ risk. Reinsurance may be proportional or non-proportional and may take the form of a cover in respect of an individual risk exposure (see facultative reinsurance) or cover in respect of multiple risk exposures (see treaty).

A reinsurance which closes a year of account by transferring the responsibility for discharging all the liabilities that attach to that year of account (and any year of account closed into that year) plus the right to any income due to the closing year of account into an open year of account of the same or a different syndicate in return for a premium. Where a reinsurance to close is effected between members of the same syndicate the reserves of the closing year of account constitute the premium for a reinsurance to close. This premium must be equitable as between the members of the two years of account concerned which means that neither the reinsured nor the reinsuring members should expect to profit from the transaction at the time it is concluded. Where a reinsurance to close is effected between members of different syndicates the managing agent of the reinsuring members will want to make a profit from the transaction for those members and will set the reinsurance to close premium accordingly. This usually involves a loading on the reserves of the closing year of account.

An underwriter of reinsurance. The reinsurance will normally be shared by one or more insurance companies or sydicates in the case of Lloyd’s. Some reinsurances may be underwritten by both syndicates and insurance companies.

Where an insurer agrees to replace irreparably damaged or stolen goods with goods of a similar type and quality under a contract of indemnity instead of paying a cash sum to the insured.

A statement of fact or expectation. Representations made as to material facts at the time of the negotiation of the placement, amendment or renewal of cover must be true whereas representations as to a matter of expectation must be made in good faith.

The amount of money that has been set aside by an insurer or reinsurer to meet outstanding claims, incurred but not reported losses and any associated expenses.

The amount of any loss or combination of losses that would otherwise be payable under an insurance/reinsurance contract which the insured/reassured must bear itself before the insurer or reinsurer becomes liable to make any payment under that contract. Compare deductible and excess. An insured or reassured may be able to insure its retention with another insurer/reinsurer.

A reinsurer that is reinsured under a retrocession.

A reinsurance of a reinsurer by another reinsurer. It serves to ‘lay-off’ risk.

The reinsurer under a retrocession.

This term may variously refer to -the possibility of some event occurring which causes injury or loss; or the subject-matter of an insurance or reinsurance contract; or an insured peril.

The determination of a member’s capital requirement according to the spread of syndicates in which he participates and the nature of business that those syndicates underwrite.

This can refer to a property that is rescued from danger on land or at sea; or an award paid to someone for voluntarily rescuing property at sea from a marine peril.

The estimated cash amount that would be received if damaged property were to be sold.

When an insurance contract is terminated prior to its expiry date by the insured any return premium that is payable will usually be calculated on a time on risk basis. The result is that the insured will receive less return premium than would be the case if the return premium was calculated on a pro rata basis (see pro rata cancellation).

A type of insurance where claims are usually made during the term of the policy or shortly after the policy has expired. Property insurance is an example of short tail business. The opposite of short tail business is long tail business.

This refers to the amount of a given risk that an underwriter has agreed to accept. It may be the same as the underwriter’s written line or, if there is signing down, a lower amount.

Where a risk is oversubscribed, which is to say that the underwriters’ written lines exceed 100% then, absent some contrary instruction, those lines will be proportionally reduced (‘signed down’) by the broker until they total 100%. An underwriter may insist on preserving his written line in which event the written lines of the other underwriters will be proportionally reduced until they total 100% when added to the preserved written line of the other underwriter.

See slip.

There are two types of underwriting slip: a placing slip and a signing slip. A placing slip is a document created by a broker that contains a summary of the terms of a proposed insurance or reinsurance contract which is then presented by the broker to selected underwriters for their consideration. Underwriters may delete, amend or add terms on a slip as they consider appropriate for the purpose of providing an indication or a quotation. A signing slip is a document that is created by a Lloyd’s broker after a quotation has been accepted for the purpose of processing premiums under the contract that is evidenced by the placing slip. It is a cleaned up version of the final placing slip and shows underwriters’ stamps, signed lines and underwriting references, these details being inserted by each underwriter at the request of the broker. Provided that it shows the underwriters’ stamps, signed lines and underwriting references a placing slip may be used as a signing slip.

A signed slip which is agreed to be a policy where the insured or the reassured does not require a separate policy.

When the availability of some or all classes of insurance or reinsurances is high relative to demand for such insurance or reinsurance. Competition amongst insurers and reinsurers leads to downward pressure on premiums and to the availability of more extensive coverage terms.

Also known as excess of loss ratio reinsurance. This is a form of excess of loss reinsurance which provides that the reinsurer will pay some or all of the reassured’s losses in excess of a stated percentage of the reassured’s premium income in respect of its whole account or a specified account, subject (usually) to an overall limit of liability which may be expressed as a percentage of the relevant premium income or an amount.

The right of an insurer which has paid a claim under a policy to step into the shoes of the insured so as to exercise in his name all rights he might have with regard to the recovery of the loss which was the subject of the relevant claim paid under the policy up to the amount of that paid claim. The insurer’s subrogation rights may be qualified in the policy. In the context of insurance subrogation is a feature of the principle of indemnity and therefore only applies to contracts of indemnity so that it does not apply to life assurance or personal accident policies. It is intended to prevent an insured recovering more than the indemnity he receives under his insurance (where that represents the full amount of his loss) and enables his insurer to recover or reduce its loss.

The maximum amount that an insurer will pay under a contract of insurance. The expression is usually used in the context of property and life insurance where the insured determines the amount of cover to be purchased.

A clause that provides retroactive cover in respect of losses occurring before the inception of a (re) insurance contract.

A clause which restricts cover to claims notified during the period from the inception of a (re) insurance contract to a specified date after the expiry of that contract.

The termination of a life insurance policy while the life assured is still alive in return for a cash sum.

A life insurance policy that pays the sum insured only if the life assured dies within the period of the policy which is for a fixed period.

Someone other than the insured or his insurer who has suffered injury or loss.

The liability that an insured has to a third party.

Where the subject matter of an insurance is lost, destroyed or damaged beyond repair.

Latin for utmost good faith.

Where the sum insured does not represent the true value of the property insured. See average for an explanation of the consequences of under insurance.

This term may refer to the process of evaluating, defining and pricing insurance and reinsurance risks including where appropriate the rejection of such risks. It also refers to the acceptance of the obligation to pay or indemnify the insured or reassured under a contract of insurance or reinsurance.

This refers to the individual who is responsible for underwriting a particular insurance or reinsurance contract and who is either an employee of a managing agent, an insurance company or reinsurance company or an employee of a coverholder or any similar underwriting agent.

Depending on the context this term may refer to: (a) a member’s allocated capacity (b) syndicate allocated capacity, with or without the addition of cover from qualifying quota share reinsurance; (c) the total underwriting capacity of all syndicates combined, with or without the addition of cover from qualifying quota share reinsurance; or (d) the underwriting capacity of an insurance company or a reinsurance company. Underwriting stamp The stamp that is applied to a slip by an underwriter to signify his acceptance of a risk. It shows the number and pseudonym of the syndicate or the name of the (re)insurance company for whom the underwriter acts and has a space for his underwriting reference to be inserted. The underwriter will insert his line on a slip next to his underwriting stamp.

The proportion of premium that relates to the unused period of cover.

Contracts of insurance and reinsurance are contracts of utmost good faith. In the event that either party fails to observe utmost good faith towards the other in regard to the negotiation of cover then the other party may avoid the contract. The duty of utmost good faith requires each party to inform the other all material facts during the negotiation of the placement, renewal or alteration of cover. An insured has a separate duty of good faith when making a claim under an insurance policy.

A contract which has no legal effect and is therefore unenforceable in a court of law. For example, an insurance contract where the policyholder does not have an insurable interest.

A contract which may be considered voide at the option of either party. For example, an insurer may avoid a policy from inception for the misrepresentation or non-disclosure of material facts during the negotiation of the placement, renewal or alteration of cover. The insurer may also avoid a policy from the date of the presentation of a fraudulent claim.

An agreement between Lloyd’s underwriters and non-marine insurance companies that they will not cover certain war and civil war risks on land.

A marine market agreement whereby underwriters will only cover goods against war risks whilst they are on the vessel subject to a time limit after arrival at the port of destination. There is reduced cover for offloading and transhipment at the port of destination.

Where an insured or reassured promises that something will or will not be done during the period of cover or that a particular state of affairs exists or does not exist at the inception of cover. If the promise is untrue or is not kept then the insurer/reinsurer may disclaim all liability under the policy from the date of the breach, regardless as to whether the false declaration was material to the underwriting of the contract or causative of any loss.

The amount deducted from a claims payment in recognition of the depreciation of the property insured through usage of it over time. No deduction is made where the cover is provided on a ‘new for old basis’.

The amount of a risk that an underwriter is willing to accept on behalf of the members of the syndicate or company for which he underwrites. This is commonly expressed as a percentage of the sum insured which is written on the broker’s placing slip. If, on completion of the broking exercise, the written lines exceed 100% then, absent some contrary instruction, they will be signed down by the broker, which is to say they will be reduced proportionately so that they total 100%.