e-iGlossary
A
B C D
E F G
H I K
L M N
O P R
S T U
V W Y
A
Accident
& Health - Class of
insurance which consist of
two main types of business - personal accident and medical expenses. Personal
accident policies will pay a lump sum in the event of accidental death or
injury. Medical expenses insurance will pay the costs of treatment for acute
conditions.
Act of God - An event which is not
the fault of any individual. Acts of God can be insurable.
Agent - A person who acts for one or
up to three insurance companies, particularly in selling insurance.
Agreed
value - The sum to be paid in the event of a
total loss under a valued policy.
Aggregate
Indemnity - The maximum dollar amount that may be
collected for any disability or period of disability under the policy.
All
Risks - Wider cover than given under a normal
property insurance policy. Covers any loss or damage apart from exclusions
stated in the policy.
Annual
Premium - See "Yearly Premium".
Arbitration - A way of settling disputes without going to court. Judgment is
given by a technically qualified arbitrator or umpire.
Assignment
- Transfer of rights under a contract.
Attestation - The signing in a contract of insurance.
Assistance - The provision by an insurer or a service company of immediate
practical help to resolve an insured problem (e.g. arranging medical treatment
abroad/organizing a roadside repair).
Assurance - See "Insurance".
Average
- A policy condition that requires the amount of a claim payment to
be reduced proportionately if the policyholder has not insured his property for
the full amount of its value or replacement cost.
B
Benefit - The money paid by the insurance company when a claim is made.
Betterment
- The principle by which a claimant has to make a payment towards
the cost of the claim because his or her property will be in better condition
after repair than before the loss or damage occurred.
Broker
- An "intermediary" that offers insurance coverage from a
number of associated insurers.
Buildings
Insurance - A policy covering the structure of a
house or other building against a number of different risks.
Business
Interruption - See "Consequential Loss".
C
Capacity - Capacity is the measure of an insurer's ability to write new
business. It depends on the maintenance of adequate reserves.
Captive
Insurer - An insurance company set up by an
industrial or commercial company, for example an oil company, to provide
insurance to that company only.
Certificate - Document issued by insurers as evidence that insurance is in
force to meet the requirements of the law (notably for motor insurance).
Certificate
of insurance - Proof of purchase of various
compulsory insurances.
Claim
- When a policyholder or beneficiary seeks payment or settlement
under the terms of a policy.
Commercial Business - Any policy taken out by a company,
partnership or organization to cover their business. Would include fleet
policies for motor business.
Commission - Money paid by an insurance company to a broker/ independent
intermediary/agent for selling policies.
Common Law - The law which has been founded upon
immemorial usage, established custom, and legal decisions, as distinct from the
Statue Law
Company
Representative - An agent appointed by an insurance
company who is authorized to sell only that company's products.
- A policy covering a number of types
of loss or damage. This is the widest cover offered. It covers the insured and
the authorized driver against third party property damage, third party bodily
injury / death as well as damages to the insured's vehicle caused by accident,
fire or theft.
Comprehensive
Insurance - A policy covering a number of types
of loss or damage. The name is used mainly in motor insurance.
Condition
- Part of a policy stating that certain rules must be followed, for
example, the duty to take reasonable care to protect property, or to report
claims to the insurance company promptly.
Contract of
Insurance
- An agreement between the insurer and
the insured, whereby the insurer undertakes in return for the payment of a
premium, to pay the insured a certain sum of money or to grant certain
compensation on the happening of a specified event.
Consequential
Loss - Insurance covering the loss of profits
of a business and certain other costs resulting from fire or other insured event
(also known as Business Interruption).
Contents
Policy - A policy covering the contents of a
home or other building against a number of different risks.
Contribution - The principle of
contribution applies where a risk is insured on more than one insurance policy
(for example on a travel and household policy), and the two insurers concerned
may share the cost of any claim.
Cover
- Protection provided by insurance.
Cover
Note - A document giving temporary evidence
of cover while the policy and certificate are being prepared.
D
Declaration
- A statement on proposal form signed by the insured, certifying the
accuracy of the information that he has given.
Deductible
- Arrangement in property insurance for the insured to pay the first
part of every loss (also known as excess).
Direct
Sources of Business - Insurance
business where no intermediary is involved, including marketing sources (e.g.
newspaper advertisements), telephone sales and business through branch offices.
E
Employers'
Liability - A compulsory class of insurance that
most employers must have to cover them against claims by employees who are
injured at work.
Endorsement - A written amendment to an insurance policy which becomes part of
it.
Exception
- A peril or contingency specifically excluded from the terms of the
policy.
Excess - An amount of money that the policyholder has to pay towards the
cost of a claim, for example, the first HK$500.
Excess of
Loss Policy - Covers claims costs exceeding an
amount specified in the policy
Exclusion - Specified property, person or event which the policy does not
cover.
Ex Gratia Payment - Any payment made by an insurance
company which is not strictly necessary, under the terms of the policy.
Exposure
- Whether, and the extent to which, an insurer is subject to losses
arising from a particular risk.
F
First
loss - An insurance for an amount known to be
less then the full value of the insured's interest in the property at risk.
Franchise
- A relief to insurers of each and every
loss which does not exceed a specified amount. If the limit is reached, the loss
is paid in full.
Fidelity
Guarantee Policy - A policy covering
the risk of dishonesty on the part of an employee who holds a position of trust,
for example, a wages clerk.
G
General
Insurance - Insurance of (non-life) risks where
the policy offers cover for a limited period, usually one year.
General
Liability - Covers the policyholder's legal
liability for injury, property damage or financial loss caused to others.
H
Hazard
- A factor which is likely to increase the
possibility of a loss occurring or the size of such a loss.
I
Indemnity
- The principle by which policyholders are put in the same financial position
after a loss as they were immediately before it.
Individual Policy - Insurance taken out by an individual
on his or her own life or by an individual or legal person on the life of
another.
Insurable Interest
- A principle of insurance which states
that someone may only take out insurance if he/she stands to suffer a financial
loss from an event covered by a policy. Individuals have an unlimited insurable
interest in their own life and that of their spouse.
Insurance - A service that offers financial compensation for something that
may or may not happen. Originally the term assurance was generally used for life
insurance, but now the two words are interchangeable.
Insurance
Company - A company that takes on risks under
the policies it sells in return for the payment of premiums. Companies may be
"mutual" (owned by the policyholders) or "proprietary"
(owned by the shareholders).
Insured - A person covered by an insurance policy.
Insurer - See "Insurance Company".
Intermediary
- Person or organization that offers advice and arranges policies
for clients. Intermediaries may be either "tied" - representing one
company in the case of life business or a limited number of companies for
general business, or "independent" - with no limit on the number of
companies with which they can deal.
Investment
- The act of allowing someone else to have use of your money in
return for payment of interest and/or a share in profits that may be made.
Investment
Income - Income earned on the money held by
insurers on behalf of policyholders, having been received in premiums but not
yet paid out on claims.
K
Key
Person Insurance - In the event of
the death of a key employee on whom the business depends for its continued
profitability, or even existence, this type of cover provides a sum of money
which can be used to pay for the cost of finding and training a successor, and
to compensate for reduced profitability.
L
Legal
Expenses Insurance - Covers the cost
of legal proceedings in circumstances defined in the policy.
Level
Premium - The same premium paid throughout the
term of a policy.
Liability - Legal responsibility for causing loss to someone else by injuring
them or damaging their property.
Life
Expectancy - The average length of time people are
likely to live, taking into account such factors as their present age, health
and occupation.
Limit
of Indemnity - the maximum amount for which the
insurer is liable under a policy of insurance.
Loading - The extent to which an individual is charged more than the
"average" for his/her insurance.
M
Material fact -
A fact which would influence the judgement of a prudent underwriter in
determining a premium or accepting a risk.
Misinterpretation - A false statement made by one party to a contract intended to
induce the other party to enter into a contract.
Motor
Insurance - Covers legal liabilities arising from
the use of a motor vehicle. Comprehensive policies also cover damage to the
vehicle.
Mutual - An insurance company which is owned by its policyholders.
N
Negligence - A failure to act in what the law considers to be a reasonable
manner.
New-For-Old
- Cover for property where an item lost or destroyed would be
replaced with a brand new one, with no deduction for wear and tear. Also called
"replacement as new".
No Claim
Bonus - A reduction in a
renewal premium to reflect a claim-free record; used most often in motor
insurance.
O
Open
Cover - A form of declaration policy in marine
insurance where shipments are declared when they are made.
Operative
Clause - The clause in a policy which (subject
to policy conditions) sets out the various responsibilities of the insurer.
P
Particular
Average - See under "Average"
Pecuniary
Loss - Covers any financial loss which may
have been incurred, e.g. business interruption and mortgage indemnity policies.
Personal Accident Insurance - A
policy which pays specified amounts of money if the policyholder is injured in
an accident. Depending on the type of disability, the payments may be made
weekly, for a set period, or as a lump sum.
Personal Lines of Business - Any
policy taken out by an individual in his/her private capacity.
Peril - A contingency which could
cause losses and which may be covered or excluded by a policy of insurance.
Policy - The document providing full details of the contract between the
insurer and the policyholder.
Policyholder
- Person or organization to whom the insurer issues the policy.
Normally the person to whom benefits are payable.
Preamble Clause - A clause in the
policy giving the basic essentials of the contract (also known as recital
clause).
Premium - The amount paid by the policyholder for insurance.
Property
Damage - Property policies cover specified
property which may be damaged or destroyed by events or perils, such as fire,
storm or theft.
Proposal Form - An application for
insurance cover.
Proposer - Person or company who
applies to take out insurance.
Proximate Cause - The active and
efficient cause of loss that sets in motion a train of events which brings about
a result without the intervention of any force started and working actively from
a new and independent source.
Public
Liability Policy - Covers legal
liability for injury or damage caused to others.
R
Rate
- The price of insurance, usually expressed as the cost of a unit of cover.
Recital
clause - See "Preamble
Clause"
Reinstatement - The restoration of damaged property to its original condition or,
in some cases, replacement by a new property.
Reinsurance - Reinsurance is the cover insurance companies can purchase to
protect themselves against large losses.
Reinsurer - An insurer who accepts
insurance from another insurer.
Renewal - The continuation of a policy beyond its original term.
Renewal
Notice - Notice sent to the policyholder
inviting him/her to renew a policy for a further period and stating the premium
payable.
Replacement-as-New - See
"New-for-Old".
Return
(or refund) - The paying back to the insured of a
portion of the premium he has paid, either because of cancellation of all or
part of the risk or because of some decrease in the hazard.
S
Salvage
- Property which is saved from a misfortune, a reward for salvage services paid
under contract.
Schedule - List of personal details of insured and subject manner of
insurance in policy form.
Slip - A piece of paper prepared by an insurance broker giving details
of the subject matter of the insurance.
Statue - An act of Parliament.
Solvency
Margin - The solvency margin is the excess of
the reserves the insurance company holds over its liabilities.
Strict
Liability - Liabilities imposed by law which
cannot be avoided even though reasonable care has been exercised.
Subject
Matter of Insurance - The property,
thing, person or liability covered by an insurance policy.
Subrogation - The right of an insurer
who has indemnified a policyholder to take over any legal rights the
policyholder may have had in respect of that particular claim.
Sum Insured - The amount for which
property is insured, and the maximum amount which the insurance company will pay
for any claim. In life insurance, the amount which is guaranteed to be paid and
to which bonuses may be added.
T
Tariff
- A collective agreement between companies to regulate prices and control the
market.
Third
Party - Someone involved in a claim who is
neither the policyholder nor the insurer.
Trading Result - An insurer's overall
profit/loss calculated as the underwriting result plus investment income.
Tort
- A breach of personal duty owed to a third party. The injured person has a
right of damages from the wrongdoer.
U
Uberrima-fides -
A duty imposed on both parties to an insurance contract to disclose all facts,
materials to the contract (also known as Utmost
Good Faith)
Underwriter
- Person who decides whether to accept a risk and calculates the
premium to be charged.
Uninsurable Risk - A risk where loss
is inevitable (e.g. a house already on fire or a person suffering from a
terminal illness). Also applies where damage is gradual e.g. rust and corrosion.
Utmost Good Faith - The principle of
insurance which requires proposers to give all relevant information to the
insurer.
V
Valued
policy - A contract in which the insurers agree
to pay the sum stated in the event of total loss without the usual allowance for
depreciation or appreciation.
W
Warranty - A condition which must be complied with literally. Infringement
of a warranty precludes the insured from the recovering under his policy,
although the loss may not been affected by the warranty. In insurance, a
warranty has the same effect as a condition in the ordinary law of contract.
Write-Off
- A damaged vehicle which is not repairable, or one which would cost more to
repair than the car was worth before the damage occurred. Also known as a
"total loss".
Y
Yearly Premium
-
Recurring premiums paid over the term of the policy, at intervals specified in
the policy.
c
m