Terminologies under insurance
1. Insurer
2. Insured
3. Premium
4. Indemnity
5. Utmost good faith r
6. Insurable interest
7. Proximate Cause
8. Subrogation
9. Contribution
10. Reinsurance - Reinsurance is the transfer of insurance business from once insurance to another. Reinsurance is an arrangement whereby an original insurer who has insured a risk insures part of that risk again with another insurer, that is to say, reinsurance a part of risk in order to diminish his own liability. The insurer transferring the business is called the ‘principle’ or ‘ceding’ or ‘original’ of fire and the office to which the business is transferred is called for ‘reinsurer’ or ‘guaranteeing office’. It is also a contract of indemnity. Reinsurance is a contract between the reinsured (the insurer) and the reinsurer.
11. Peril of the Sea - Perils of the Sea is also known as Nautical/ marine perils/maritime. It means all those perils that are consequential or incidental to sea journey. It include collisions, war perils, captures, jettison, barratry. It does not include the typical action of winds and waves.
12. Perils - A peril is defined as the cause if the loss. Examples of peril include fire, tornadoes, heart attacks and criminal acts. Insurance policies provide financial protection against losses caused by perils.
13. Jettison - Jettison means voluntary throwing away of the cargo or part of a vessel’s equipment for the lightening or relieving the ship for common safety. The aim of the intentional throwing away of the goods or property is to relive the vessel from the some imminent peril. Accidental falling of the things does not constitute jettison
14. Actual Loss - Actual Loss is a material and physical loss of the subject matter insured. Subject matter is completely destroyed or so damaged that it ceases to be a thing of the kind insured. It is no longer the same as originally insured. For example, A ship is entirely destroyed by the fire constitute total loss.
15. Constructive Total Loss - In constructive total loss, the ship or cargo insured is not completely destroyed but is so badly damaged that the cost of repair of recovery would be greater than the value of the property saved. In such a case, it is preferable to abandon the destroyed property.
16. Partial Loss - A partial loss occurs when the subject matter of insurance is partially destroyed or damaged. In marine insurance, a partial loss of vessel or cargo is called an average.
17. General Average -General average refers to the sacrifice made during extreme conditions for the purpose of rescuing the ship and the cargo from being damaged. It is incurred for the benefits of all interests. It is always voluntary and intentional. This loss has to be borne by all parties who have an interest in the marine adventure. For example, damage to ship engine or machinery in attempting to raise a stranded ship, throwing part of the cargo, equipment of the vessel overboard to lighten the load and save the vessel.
18. Particular Average Loss - Particular average loss is defined as ‘a partial loss’ of the subject matter insured causes by a peril insured. It is accidental in nature. Such a loss is borne by the underwriter who insured the object damaged.
19. Enemies - The ships belonging to the enemy may cause loss to the insured and is re underwritten by the marine policy. This policy extends to all the persons of the enemy country and to their hostile acts provided such acts form part if the enemy actions
20. Agent - A licensed person or organization authorizes to sell insurance by or on behalf of an insurance company.
21. Broker - A licensed person or organization paid by you to look for insurance on your
behalf.
22. Claim - Notice to an insurer that under the terms of a policy, a loss may be covered.
23. Burglary – There are two type of burglary
(a) Theft of the property from the premises following upon entry if the said premises by violent and forcible means
(b) Theft by a person in the premises who subsequently breaks our by the violent and forcible means
24. Hazard - Hazard refers top those conditions or features or characteristics which create or increase the chance of loss arising from a given peril.
There are two type of hazard
(a) Physical Hazard
(b) Moral Hazard
(a) Physical Hazard – Physical hazard refers to the risk arising from material features of the subject matter of insurance, for example, Fire - wooden floor are more prone to fire, greater the number of the storey in a building, the greater the hazard.
(b) Moral Hazard - Moral hazard arises from human weaknesses, for example, dishonesty, carelessness etc. or from general economic conditions like condition of unemployment would result in a increased of burglaries.
25. Disability Insurance -This insurance provides compensation to the insured when income is interrupted or terminated because of illness, sickness or due to injury because of accident. It provides insurance against loss of income.
26. Warranties - Warrantee means a ‘guarantee’ or a condition which is basic to the contract of insurancy. Any breach of insurance warranties goes to the root of the contract and gives the aggrieved party the right to avoid the contract. Section 35 of marine insurance Act define warranties as “ A warranty means a promissory warranty. It means an undertaking by the assured that same particulars thing shall or shall not be done, or that some condition shall be fulfilled or he affirms or negatives the existence of a particular state of facts”.
In simple words, it means that the insured undertakes that some particular thing shall or shall not be done, or that some stipulation shall be fulfilled, or that particular state of the facts does not exist. If a warranty is not complied with by the insured, the contract comes to an end / and the insured is going to suffer.
27 Total Loss - Total loss means that the subject matter insured is fully destroyed and it totally lost to its owner.
28. Underwriting - Underwriting is the most important aspect for any insurance, underwriting is a process of selecting applicants for insurance and classifying them according to their degrees of insurability so that the appropriate premium rates may be changed.
So underwriting include principle and practices concerning the acceptances or rejection of risk, the total amount of acceptance, the total amount of retention for insurer’s own amount and treatment of the balance through reinsurance
29. Workers Compensation Insurance -It provide four type of benefits (Medical care, death, disability and rehabilitation) for employee job related injuries or disease as a matter of right (without regard of fault)
30. Grace Period - A period (Usually 31 days) after the premium due date, during which an overdue premium may be paid without penalty. The policy remains in force throughout this period.
31. Material Misrepresentation - The policy holder/ applicant makes a false statement regarding any material facts on his/her applications. For example, in case of life insurance, the applicant may not reveal the true age and details of the existing illness/ diseases.
32. Risk - Risk means uncertainty concerning loss, and not the loss itself, or the cause of loss; or the chance of loss. If, for example, the chance of loss by fire to a particular type of residential house is 1 in 1000, a person who owns a single house cannot predicts his loss. Either his flat will burn or will not burn. He has no basis for predicting the outcome. He is faced with complete uncertainty even though the chance of loss is low.
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