Insurance Glossary J-Qtravis
Insurance Glossary [J to Q]
When insurers and loss adjusters quote those mysterious words and sadly shake their heads, you can sense there is a problem on that claim – if only you could understand what it was! Here is a glossary of some commonly used insurance terms but if you really need help with those problematic claims contact Trafalgar.
Better still, contact us now and avoid those problems altogether.
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.
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.
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.