GLOSSARY OF TERMS K to Z

 

GLOSSARY OF TERMS K to Z

·         KNOWN LOSS

A loss about which the insured and/or the insurer is aware at the time when insurance is effected.

·         KNOT

A ship's unit of speed - a nautical mile (i.e. generally 6080 feet - 1.151 statue miles or 1853 metres) per hour.

·         KNOCK-FOR-KNOCK AGREEMENT

In relation to Motor insurance, agreement between two or more insurers to the effect that in the event of collision between two motor vehicles insured with two of them separately, each insurer will bear the loss with regard to the vehicle insured with them without going into the cause of which vehicle has caused the collision. 

There is however no effective implementation of this agreement by the insurers because of various reasons.

·         KINDRED PERILS

Perils of the same kind.For example burglary & robbery, storm & hurricane.

·         KILL

The term, used in energy risks, refers to the following:
1. In drilling, to prevent a threatened blowout by taking suitable preventive measures (For example to shut in the well with the blowout preventers, circulate the kick out, and increase the weight of the drilling mud)
2. In production, to stop a well from producing oil and gas so that reconditioning of the well can proceed.

·         KIDNAP-RANSOM INSURANCE

Insurance coverage providing for payment within the limit specified in the policy of ransom demanded by kidnappers of the insured.

·         KICK

The term, used In energy risks, refers to entry of water, gas, oil, or other formation fluid into the well bore. It occurs because the pressure exerted by the column of drilling fluid is not great enough to overcome the pressure exerted by the fluids in the formation drilled. 

If prompt action is not taken to control the kick or kill the well a blowout will occur.

·         KENNEY RATIO

Proposal by Roger Kenney, an insurance journalist, that in order to maintain the solvency of a property and casualty insurance company, insurance premiums written should not exceed more than twice the company's surplus and capital. 

This historical measure is used by regulators to determine the company's claim paying capacity while maintaining its solvency.

 

·         LIMIT PER BOTTOM

This represents the maximum limit upto which any single shipment will be covered under the open cover by the insurer.
'Limit per bottom' clause will appear in all open covers covering imports or exports. 

·         LIMIT PER ACCIDENT

Maximum liability of the insurer in respect of all claims arising out of a single accident. 

·         LIMIT OF LOSS WITH REINSTATEMENT PROVISION

In an Excess of Loss Reinsurance Treaty there is limitation to aggregate losses payable during the cover period by the Reinstatement Provision. If such limit is exhausted before the expiry date of the cover,the XL Cover will become dead before the expiry date.

·         LIMIT FOR ANY ONE LOSS

Refers to the amount of maximum liability of the insurer under the policy for any one loss or series of losses arising out of one event.

·         LIGHTNING

A flash of light in the sky caused by the discharge of atmospheric electricity from one cloud to another or between the cloud and the earth. Lightning may cause crevices in a building or fire damages. Lightning is a peril covered under the term "Fire" in relation to the Standard Fire and Special Perils Policy.

·         LIGHT MOTOR VEHICLE (LMV)

A transport vehicle or omnibus, the gross vehicle weight (GVW) of either of which or a motor car or a tractor or a road roller, the unladen weight of any of which does not exceed 7,500 kgs.

·         LIFT (THIRD PARTY LIABILITY) INSURANCE

An Insurance policy designed for owners of passenger lifts in buildings to take off their liabilities arising out of the use and operation of the lifts. Policy provides indemnity for the legal liability of the insured for payment of compensation to third parties for loss of life or bodily injury or for the damage to the third party property.Legal expenses incurred by the insured with the consent of the insurer for defending any legal action against the former by such third parties will also be payable under the policy. The policy will contain two limits one for any one accident, and another for all the claims during the period of the policy which will represent the insurer's maximum liability.

·         LIFE POLICY FOR TWO WHEELERS

Insurance policy for two wheelers covering third party risks and remaining in force so long as vehicle is validly registered. This will provide continuous cover for third party liability to small vehicle owners.

·         LIEN

A legal right which one possesses over the property of another until the latter has satisfied a liability towards the former. (For example,a carrier has a lien on the cargo carried by him until the freight for carriage has been paid)

·         LICENSE FEE

Sum paid by an insurance company or other firms or individuals as fixed by the Regulatory Authority for transacting business as per the authority granted by the license. 

·         LICENSE

Legal authority given to a company,agent ,broker or a consultant to transact insurance business within the framework of applicable laws and/or acts and/or regulations that are in force.

·         LIABILITY OF CARRIER (CARRIAGE BY SEA)

Under the contract of affreightment, the carrier is obliged to supply a vessel which is both sea-worthy and cargo-worthy. Besides providing a competent crew to man the ship, he must carry, care for and deliver the goods at destination in the same good order and condition in which they were delivered to him. If on account of failure on the part of the carrier to discharge his duties, the cargo suffers any loss or damage, he is liable to make good the loss to the cargo owner. The ship owner's liability towards cargo is limited by statute. The carriers' liability to cargo is insured through P & I Clubs and not in the ordinary marine insurance market.

·         LIABILITY LIMITS

The sum or sums stipulated in an insurance contract upto which an insurance company is liable to meet the claims made by the insured.

·         LIABILITY INSURANCE

Insurance designed to protect the policyholder against financial loss due to liability resulting from injuries to other persons or damage to their property.

·         LIABILITY

Any legally enforceable obligation.

·         LETTER OF TRANSFER (G.A.)

In relation to General Average, refers to a letter obtained from the insured by the insurer after paying on behalf of the insured the general average deposit due to be paid by the insured in connection with a general average. On the strength of this letter ,the insurer can receive from the ship owner's any excess amount of deposit over the actual contribution amount.

·         LETTER OF INDEMNITY

Where original policy has been lost or misplaced by the claimant, a letter of indemnity is obtained from him by the insurer to the effect that in case, subsequently, some other person presents his claim on the insurer on the support of the original policy, he will reimburse the claim amount paid to him and also hold the insurer harmless for effecting settlement with him without production of the original policy. This is relevant only in respect a Marine Policy in view of its freely assignable nature.

·         LETTER OF CREDIT

A document authorising payment of an agreed sum to a named person at the risk of the issuer. If expressed as irrecoverable,the authority cannot be withdrawn.

·         LESSEE

A person to whom a lease is granted;A tenant under a lease.

·         LENDER

Individual or firm that extends money to a borrower with an undertaking by the latter that such money shall be repaid, usually with interest. Lenders extending loans against assets, whether movable or immovable,have an insurable interest on such assets.

·         LEGALITY OF THE CONTRACT

One of the essential elements for a contract to be legally valid. Applicable to insurance contracts also. The subject matter of the contract must be legal.

·         LEGAL OPINION

Opinion given by a lawyer in respect of an issue, describing what is legal or lawful.

·         LEGAL LIABILITY INSURANCE POLICY

Insurance coverage to provide indemnity to the insured in respect of financial consequences of legal liability. Wherever liability arises under Civil Law, compensation (damages) becomes payable. Besides,there may be legal costs awarded against the insured and also legal costs of defence of the claim incurred which are also reimbursed under the policy.

·         LEGAL LIABILITY

Financial liability towards third parties imposed under Civil Law.

·         LEASE

Contract whereby the owner of some fixed assets like building, equipment, furniture,etc. allows the usage by the contracting party of such fixed assets for a specified period of time in consideration of certain payment of amount in the form of rent by the said contracting party. The owner of the leased property is called the lessor and the user the lessee. 

·         LEAKAGE FROM AUTOMATIC SPRINKLER INSTALLATIONS

Accidental discharge or leakage of water from an automatic sprinkler installation arising out of damage to the sprinkler head by impact from some object or heat from some source other than fire causing sprinkler head to operate. Loss/damage to an insured property due to such leakage of water is covered under the standard Fire and Special Perils Policy.

·         LEADER/LEADING REINSURER

Generally an Excess of Loss Reinsurance Treaty Terms are negotiated with a leader who quotes rates and other terms and supports with a lead share. A reputable leader's lead makes it easy to complete placement with good securities. Generally,other reinsurers agree to follow the leader. On a proportional treaty generally there is no leader but there may be a leading reinsurer with a large share. 

·         LEAD INSURER

The insurer among the coinsurers in respect of any risk jointly insured by them, who has greater share than others. Leader or the lead insurer will deal with the insured on all matters connected with the insurance coverage including full premium collection, document issue, other clients' servicing matters including settlement of claim for the full assessed loss etc. 

It is customary for all coinsurers to issue to the leader a letter of authority to facilitate the leader to carry out all the above functions on their behalf which would be binding on them. 

Normally ex-gratia settlement of claims do not come under this arrangement. Periodical settlements will be effected as between the leader and the coinsurers in connection with release of coinsurer's share of premium and collection of their share of losses.

·         LAY-UP RETURNS

In Marine Hull Insurance, Scale of Premium Refund agreed by the International Marine Insurance Market when the insured vessel should be laid up during the period of insurance. As the risk to the insurer during lay-up period would be very less when compared to the risk during navigation of the vessel, return of premium is allowed by the insurer for the laid-up period. This return of premium is subject to certain conditions imposed by the insurer.In Motor Insurance, if vehicle is laid up in the garage, risks covered under a Motor Comprehensive Insurance Policy are restricted to fire, burglary and theft. Hence, part of premium becomes refundable as per the provisions in the All India Motor Tariff.

·         LAYOUT PLAN

A representation of the shape of horizontal section of a building. The shape of the building at the ground floor is always taken and by adding further details, the plan is built-up so as to incorporate all features of all stores and also of the roof. Plans contain clear and concise form of important matters which can not be covered by an inspection report.

·         LAY-UP WARRANTY

The hull policies covering minor vessels such as fishing vessels and sailing vessels carry a "Lay-up Warranty" providing that the insured vessel be laid up out of commission during a specified period,which is monsoon or winter months. The vessels may be laid up afloat, or on mud or the "hard".

·         LAWFUL ADVENTURE

An implied warranty in respect of marine insurance contracts to the effect that the adventure must be legal.

·         LATENT DEFECT

Term used to refer to any hidden flaw or defect in the structure of the ship or machinery which is not readily discoverable by a competent person using reasonable skill in an ordinary inspection. Any loss/damage caused by a latent defect is recoverable under a Marine Hull Insurance policy which provides coverage as per I.T.C. (HULLS) or I.V.C. (HULLS)

·         LARGE LOSSES INFORMATION

Information on large losses is provided to reinsures for the purpose of reviewing the performance of a treaty, be it proportional treaty or excess of loss. In relation to a proportional treaty, a loss is called a "large loss" when it exceeds the "Cash Loss Limit" provided in the treaty wordings. In relation to an excess of loss reinsurance, a loss is called a "large loss" when it exceeds 50% of the underlying limit.

·         LAPSED POLICY

An insurance cover which has come to a close earlier to the original date of expiry as stated in the policy, because of non-payment of premium by the insured. As regards non-life insurance, this would arise only in respect of Marine Hull policies or other policies issued for periods greater than one year where the facility of installment premium payment is extended. 

When the insured fails to pay the installment on or before the due date, the policy will lapse on the due date.

·         LANDED BUT MISSING

Situation where an import or export cargo would be lost after landing at the destination port, because of theft, over issue or wrong carriage to some other place. In all such cases, Port Trust Authorities would, after a search, issue a certificate known as Landed But Missing Certificate or C certificate.

·         LAG

The period that has elapsed between when claims actually occurred and when actually paid.

·         LABEL CLAUSE

A clause significant to Marine Cargo Insurance. In respect of canned or similar type of goods which are labeled for product identification purposes, where such labels will be damaged by contact with water or other cargo, insurer's liability will be restricted to the cost of re-packing and re-labeling only as per this clause.

·         L.P.G. GAS DEALERS INSURANCE

A comprehensive insurance package for the benefit of the L.P.G. gas dealers providing cover for the insured, office and service persons, building and fixtures, contents including gas cylinders, furniture, etc. against accidental personal injury and property damage , insured's liability to his employees under Workmen's Compensation Act and also his liability to third parties and insured's financial loss arising out of any act of infidelity on the part of his employees.

·         L.C.R.

"Largest Claims Reinsurances" is a method more suitable to Liability Reinsurances where a statistical survey of large losses is taken on last five years and a prescribed limit of largest loss is fixed so that reinsures are made liable to pay only those losses which cross that limit.

·         LOSSES OCCURRING BASIS

In relation to excess of loss reinsurance treaties, the cover provided under the arrangement being on losses occurring basis, meaning that all losses occurring during the period of the treaty irrespective of the inception date of the original policy or policies (issued by the reinsured to the original insured) are covered by the treaty.

·         LOSSES DISCOVERED OR CLAIMS MADE BASIS

The term, in relation to excess of loss reinsurance treaties, ​refers to all losses discovered, reported or made during the period of the treaty irrespective of the inception date of the original policy or policies or of their occurrence. 

This type of cover is sometimes used when it is difficult to pinpoint an exact date of occurrence,​for example Fidelity Guarantee Policies

·         LISTED COMPANIES

Companies whose shares are listed for trading in Stock Exchanges. The respective Stock Exchange in which the shares are listed prescribes regulations for these Companies regarding publication of their accounts and disclosure of various information and details. Hence,the listed companies may be said to be more transparent.

 

·         MAXICAB

A motor vehicle constructed or adapted to carry more than six passengers, but not more than twelve passengers, excluding the driver, for hire or reward.

·         MATE'S RECEIPT

When the goods for export are directly handed over to the captain of the ship, or his assistant called the mate, he issues a receipt called the mate Receipt. This receipt is subsequently exchanged by a Bill of Lading issued on behalf of the Shipping Company.

·         MATERIAL REPRESENTATION

A representation to the insurer which would affect him in accepting the risk or in rating the premium.

·         MATERIAL MISREPRESENTATION

Misrepresentation of certain facts which will influence the insurer's judgement with regard to the insurance of a risk and fixing of rates, terms, conditions, etc.

·         MATERIAL FACT

A fact which would influence the judgement of a prudent insurer in deciding whether to accept the risk and if so, at what rate of premium, terms, conditions, etc.

·         MATERIAL DAMAGE PROVISO

Every CL (Fire) Policy must contain a proviso that a) There shall be in force an insurance covering the insureds interest in the property at the premises against such damage; and b) Payment shall have been made or liability admitted under such insurance However, this proviso shall not apply to property on which the insured has no direct insurable interest.

·         MATERIAL DAMAGE

Physical damage to any tangible property like building, machinery, stocks, furniture, household goods, automobiles etc., which results in reduction in the intrinsic value of such property.

·         MASTER POLICY

A policy that is issued to an employer or trustee or an association or a society establishing a group insurance plan for designated members of an eligible group.

·         MASS COMMUNICATION

Use of widely circulating media, such as newspapers, magazines, television, and radio to inform the general public.

·         MARKETING AND DISTRIBUTION RISKS

Failure of a firm/company to sell all its produces at not less than the planned price owing to competitors undercutting the price or introducing better products, change in the fashions and the tastes of the customers, general economic conditions or political moves, etc.

·         MARKETING

The process of optimising the use of the resources of an enterprise by seeking to identify and satisfy the needs of consumers, actual or potential, in the best way for the enterprise.

·         MARKET VALUE

Value at which similar property could be normally purchased or sold in the local market. For insurance purposes, market value is arrived at after deduction of appropriate value for depreciation of the property based on age, usage, wear and tear and maintenance, from current value.

·         MARKET SHARE

Percentage share of a company out of the total sales by the entire industry, in respect of all the products marketed, in all the areas of operation, or a specific product, a specific area of operation and so on.

·         MARKET RETENTION

The extent of capacity available within the local market to accept a risk.

·         MARKET PENETRATION IN GENERAL INSURANCE

(i) Marketing strategy adopted by the insurer to increase the sales of selected insurance products within an existing market through vigorous marketing techniques.

(ii) Extent to which a particular product or certain identified products are purchased in a particular market.

·         MARITIME FRAUD

Maritime fraud occurs when one,or more of the various parties , involved in transactions connected with maritime adventures, acting in collusion,succeed, unjustly and illegally, in obtaining money or goods from another connected in the carriage, trade and financial obligations.

They are mainly in the form of - 
(a) Scuttling of ships
(b) Documentary frauds
(c) Cargo thefts
(d) Frauds in connection with charters. 

·         MARITIME CONVENTIONS ACT, 1911

The act which provides that in the event of a collision between two vessel, the degree of blame of the respective vessels in relation to the collision should be fixed in order that the liability of one ship to the other can be correctly assessed. This act does not govern loss of life or personal injury liabilities.

·         MARINE INSURANCE CERTIFICATE

Whenever an open cover is issued to provide automatic and continuous insurance protection to a regular exporter/importer engaged in international trade, the insured is expected to declare details of each and every shipment coming within the jurisdiction of the open cover as and when the shipment would take place and the particulars are available. 

As the open cover is only an agreement between the insurer and the insured and not a stamped document, the  insurer will issue a specific stamped certificate against each declaration after collection of appropriate premium on such individual declaration. Sometimes in the place of the Certificate insurers issue stamped policy for the individual declaration. This stamped certificate of insurance or the policy will be used for all legal purposes.

·         MARINE INSURANCE ACT, 1906

This act which came into effect in UK on January 1 1907, codified the law relating to Marine Insurance and is now the basis of the marine insurance principles today. The Indian counter part of this act is the Marine Insurance Act, 1963.

·         MARINE INSURANCE

Broadly concerned with the insurance of - goods in transit from one place to another by sea, air, rail , road and inland waterways; ships, covering loss or damage to the hull and machinery of a vessel and ship owner's various interests and liabilities; and freight at the risk of the carrier. 

·         MARINE HULL INSURANCE

Insurance of ocean-going steamers and other vessels. Hull Insurance provides the cover to the hull and machinery of a vessel as to the materials and outfit and stores and provisions for the officers and crew. Policy also covers liabilities.

Policies are also issued to cover loss of freight to the ship owner and disbursements i.e. amounts spent by the ship owner in fitting out the vessel including provisions and stores. Further, policies are also issued to cover vessels in course of construction.

·         MARINE CLAUSE

A clause which appears as one of the general conditions in the Standard Fire and Special Perils Policy. By this clause, the insurer is not liable for any loss or damage to the insured property if the said property, at the time of the accident resulting into the loss, is also insured under a marine policy inclusive of the peril which has caused the loss, except for the excess over the loss recoverable under the marine policy.

·         MARINE CARGO INSURANCE POLICY

Insurance in respect of goods and/or merchandise in transit from one place to another by sea, air, rail, road or registered post under the relevant contract of carriage.

·         MARINE ADVENTURE

A voyage or period of time during which cargo is exposed to maritime perils.

·         MARINE 50/50 CLAUSE

The clause further provides that in the event such an inspection is not possible immediately on arrival and damages are discovered only at a later date when the items are taken up for erection, the liability for such damages will be shared at 50/50 as between the insurer for marine cargo and insurer who has issued the ‘erection all risks’ policy in question.

·         MARGINAL WELL

In energy risks, vessel that is approaching depletion of its natural resource to the extent that any profit from continued production is doubtful. 

·         MANUSCRIPT INSURANCE

Cover designed to suit the particular needs of an insured, when a standard policy cannot serve the purpose.

·         MANUFACTURERS STOCKS

Consists of raw materials, stock-in-process and finished goods. 

·         MANIFEST

Statement prepared by the master of a ship, of all the cargo carried in the ship. This document is depended upon for comparison in case of short -landing of any cargo either totally or partially from the vessel or the details of all the cargo in case the vessel is totally destroyed by any of the maritime perils. A copy of the manifest is kept on board the vessel for cargo identification in case of any necessity.

·         MANAGED CARE

Healthcare systems that integrate the financing and delivery of appropriate healthcare services to covered individuals by arrangements with selected providers to furnish a comprehensive set of healthcare services.

·         MALPRACTICE INSURANCE

Coverage for a professional, such as a medical practitioner or lawyer, against liability claims resulting from alleged malpractice in the performance of professional services. (See also "Professional Indemnity Insurance")

·         MALPRACTICE

Improper conduct of a professional in the performance of his duties, done either intentionally or through carelessness or ignorance. Negligent or unskillful performance of duties where professional skills are obligatory.

·         MALICIOUS DAMAGE

Deliberate damage to or deliberate destruction of the insured property or any part of it by the wrongful act of any person or persons. Cover against malicious damage is provided under the standard Fire and Special Perils policy as a part of the riot , strike, malicious and terrorist damage cover. This cover is also provided under Marine Cargo insurance and Inland Transit insurance.

·         MAJOR PORT TRUST ACT, 1963, - LIMITATION

As per Section 120, no suit or other proceeding shall be commenced against a board until the expiration of one month after notice has been given or after six months after the accrual of the cause of action.

·         MAINTENANCE WARRANTY

A warranty incorporated in the E.D.P. Equipment insurance policy, warranting the existence of a service or maintenance contract with the computer makers.

·         MUMBAI

In relation to All India Motor Tariff, refers to areas coming under Municipal Corporation of Greater Mumbai and all areas upto and including Municipal / Panchayat limits of:
(a) Thane
(b) Panvel
(c) Dombivli
(d) Kalyan
(e) Bhiwandi
(f) Virar
(g) Bassein
(H) New Mumbai including areas under City and Industrial Development Corporation (CIDCO).

·         MAILING LIST

Compilation of possible customers prepared as a list for use in direct-mail solicitation.

·         MADE GOOD AMOUNTS

The term that is associated with general average refers to the value of the property, which has been sacrificed as a part of the general average measures that is paid to the owner of the cargo from out of the general average contribution made by all those whose property or other interests, which have been saved.

·         MACHINERY BREAKDOWN INSURANCE (MACHINERY INSURANCE)

Insurance for plant and machinery, providing cover against all kinds of accidental electrical and mechanical breakdown due to internal and external causes. Cover is in force during the time machine is in operation or at rest or in process of dismantling and overhaul or during subsequent re-erection at the same premises. The principal exclusions are all those perils which are covered under a standard Fire and Special Perils policy as also willful negligence, war, gradual deterioration etc.The rates, terms and conditions of this cover are governed by tariff. 

 

·         NON-CONCURRENT POLICIES

Two or more policies which cover part only of the properties covered by other policies or which include properties not covered by others. However some property will be common to all.

·         NON- ASSIGNABLE POLICY

Policy which can not be assigned by the insured to another. Normally property and liability policies are not assignable.

·         NON HAZARDOUS

Refers to the physical/chemical properties of a matter of whatever state which present no undue exposure to the risk in question. Normally the premium rates will be the lowest for non-hazardous goods.

·         NON FARE PAYING PASSENGERS

Provision in Motor insurance Commercial Vehicles policy to cover, in respect of commercial vehicles which are not authorised to carry fare paying passengers, persons connected with the specific journey allowed to travel on payment of additional premium

·         NON DESTRUCTIVE TESTING

Testing a component without actually destroying it or damaging it.

·         NON - PERFORMING ASSETS

This refers to the investments which are classified as Non-performing Assets (NPA) as per the accounting policy of the Company. 

RBI gives detailed guidelines as to how and when an investment has to be treated as NPA which is with reference to the non-payment of the loan or debenture when it is due or non-payment of the interest on the loan or debenture when due. 

The amount to be provided for in these cases is mentioned in the RBI guidelines and they are applicable to banks and financial institutions. Insurance companies may choose to follow these guidelines and provide for the same in the books of accounts.

·         NOMINEE

Person, firm or institution whose name is mentioned in the accident insurance policies to be the recipient of the policy benefits in the event of death of the insured person arising out of an accident

·         NO KNOWN OR REPORTED LOSS

This condition is sometimes stipulated by insurers/reinsurers who base their acceptance of a proposal for insurance/reinsurance subject to no known or reported loss to subject matter proposed for insurance/reinsurance as on the date of their acceptance.

·         NO FAULT LIABILITY

Means that the claimant is not required to prove that the death, injury or damage was due to any wrongful act, neglect or default of any person. 

The relief provided under the following acts come under "No Fault Liability" 
1. Public Liability Insurance Act 
2. Motor Vehicle Act in connection with Road Accident Victims 
3. Workmen’s Compensation Act

·         NO CURE, NO PAY

1. A term used in connection with salvage operations of a vessel or cargo in distress. Salvage Award payable to the salvor will be on 'No cure No pay' basis in the sense he is entitled for the award only if and when the property is saved. 

 2. Recovery Agents pursuing recovery from the carriers, will handle the assignment given to them by the insurers on 'No cure No pay' basis in the sense that they will claim fee only when they recover some amount from the carriers. 

·         NO CLAIM REFUND

Portion of premium agreed under the policy to be refunded to the insured in the event of no claim being reported or paid during the entire policy period. It is customary for the insurance companies to link this with the renewal of the policy, to ensure renewal with them without fail.

·         NO CLAIM BONUS

A reduction as a percentage in the manual or the prospectus premium at the time of renewal of the policy based on favourable claims experience in the previous year/s policy/ies for the same insured property against the same insured perils.

·         NO CESSION WITHOUT RETENTION

It is a condition in reinsurance contracts that the ceding company has to retain a portion of the risk and reinsure only the balance. Contract does not permit reinsurance for 100% of the risk. 

This condition is mainly to safeguard reinsurers' interest to ensure that bad risks are not passed on to them fully.

·         NEW BUSINESS CLAUSE

A special clause added to the specification in a loss of profit (Consequential Loss) policy. When insurance is arranged for an entirely new business where no past performance figures exist. 

This clause amends the definitions of rate of gross profit, annual turnover and standard turnover to expand the results from the commencement of the business to the date of damage to give proportionate figures for a complete twelve months. (See 'Gross Profit', 'Annual Turnover', 'Standard Turnover' and 'Specification')

·         NET WORTH OF THE COMPANY

This indicates the excess of assets over the liabilities of the Company, which in turn mean, the sum of the equity and preference capital and free reserves like general reserve of the Company.

·         NET TONNAGE

Passenger and/or cargo accommodation expressed in a cubic measurement based on 100 cubic feet equals one net registered ton.

·         NET RETENTION

Extent of capacity which an insurance company puts forth to retain the risk to its own account without any recourse to reinsurance.

·         NET RETAINED LINE CLAUSE

A clause which is applicable to the excess of loss reinsurance cover, which refers to the protection offered by the cover only to the retained net line account of the reinsured. The net account of the reinsured may include the following: a) Normal Any One Risk Retention as per the reinsurance programme b) Unplaced share of the proportional treaty after retention. As per the net retained line clause the excess of loss cover will exclude the second item.

·         NET PROFIT

The Net trading profit excluding capital receipts and accretions and outlay chargeable to capital. It is arrived at after making provisions for all standing charges but prior to deduction of tax. The Loss of Profit policy provides cover for the loss of net profit and the insured standing charges during the period of interruption to production arising out of a damage in the insured premises by an insured peril.

·         NET PREMIUM WRITTEN

Total premium written by a ceding company minus premium ceded to the reinsurer.

·         NET PREMIUM

The portion of the premium which is designed to cover losses/ benefits payable under the policy, but not the various expenses.The portion of the premium retained by the office after deduction of expenses of management inclusive of the agent's commission.

·         NET LOSS

Residual loss to the insured after taking into account realisation from salvage and/or recoveries from third parties if any, but that such salvage and/or third party recoveries shall be taken net of any expenses incurred towards realisation of such recoveries.

·         NEON SIGN INSURANCE

Insurance coverage in respect of loss or damage to the neon sign installation by (a) accidental external means and (b) fire, lightning, external explosion and theft. 

Insured's liability to third parties arising out of an accidental damage to the insured neon sign can also be covered under the policy.

·         NEGOTIABLE INSTRUMENT

A document of title to property that may be transferred from one person to another in the course of business.

·         NEGLIGENCE

Failure to use the care that a reasonable and prudent person would have used under the same or similar circumstances. 

·         NCDRC

National Consumer Disputes Redressal Commission (NCDRC): Complaint can be filed in NCDRC, by an aggrieved insured against an insurer where the value of the claim exceeds `20,00,000/- territorial jurisdiction of the commission is whole of India. Appeals against the orders of any of the State Consumer Disputes Redressal Commission also can be filed before the NCDRC.

·         NAVIGATIONAL LIMITS

Limits prescribed by the port authorities and the Director General of Shipping with regard to the area of operation of the ships, which depend upon the size, nature and type of the vessels. Insurance policies also fix territorial limits for operation of the vessel depending upon its use.

·         NATURAL RESOURCES

Actual and potential forms of wealth supplied by nature, such as coal, oil, wood, water power and arable land.

·         NATURAL LOSSES

Loss or damage caused by vagaries of nature, such as storm, hurricane, floods, lightning, earthquake etc.

·         NATURAL GAS

Primarily methane and also some ethane with small quantities of entrained heavier fractions, such as propane, butane, etc. These and others, are readily condensed from the Natural Gas flow and are known as natural gas Liquids, as distinct from Liquid Natural Gas (L.N.G.), which is methane/ethane refrigerated under pressure to the liquid state.

·         NATIONALITY OF VESSEL

Nationality of the vessel is important to the insurer particularly if the vessel sails under a "Flag of Convenience", as he would not like extend cover for cargo shipped by such vessels and insert a warranty to that in the policy or the open cover. (See "Flag of Convenience")

·         NATIONALISATION

Takeover of a private company's assets or operations by a government. The company may or may not be compensated for the loss of assets.

·         NATIONAL WEALTH

Sum total of the value of all the capital and goods held within a nation.

·         NAMED PERILS POLICY

Policy in which the perils against which the coverage is granted is listed. Insurer will be liable for losses only when they are caused by any of the listed perils.

·         NAMED INSURED

Individual, firm, industry or an organization, in whose favor and specific name the policy is issued.

 

·         OFFER AND ACCEPTANCE

One of the essential elements for a contract to be legally valid. Applicable for insurance contracts also. A contract is completed by one partys acceptance of an offer made by the other party

·         OFFER

Manifestation of willingness to enter into an agreement. 

·         OFF DUTY COVERS

Personal Accident insurance cover issued to a person for the restricted hours when he is not at work and/or not on official duty. Normally premium charged for this policy will be 50% of the premium charged for a 24 hours cover.

·         OCCURRENCE LIMIT

Maximum liability of the insurer in respect of all claims arising out of occurrence of one event.

·         OCCURRENCE BASIS POLICY

A Liability insurance policy that covers claims arising out of events that occurs during the policy period, regardless of when the claim is filed.

·         OCCURRENCE

Event that results in bodily injury and/or property damage to a third party. As regards liability insurance policies all claims for bodily injury or property damage in relation to different third parties that would have arisen out of one event would be treated cumulatively for application of insurer's maximum liability in respect of any one occurrence.

·         OCCUPATIONAL HAZARDS

Occupations which expose the insured to greater than normal physical danger by the very nature of the work in which the insured is engaged, and the varying periods of absence from the occupation, due to the disability, that can be expected.

·         OCCUPATIONAL DISEASE

Disease contracted arising out of employment related exposures and conditions. Workmen's Compensation insurance policy provides cover against occupational diseases.

·         OBSOLESCENCE

Process by which property becomes useless, not because of physical deterioration, but because of changes outside the property, notably scientific or technological advances. 

 

·         PALLETS

This is a special packing method where bundles, bales, cases etc. are placed in wooden platforms and then securely tied. Pallets are then lifted by fork-lifts or cranes and placed into the holds of the vessels.

·         PALLETISING

Assembly of one or more packages on a pallet base and properly secured to it.

·         PAIR & SET CLAUSE

Where the value of certain articles such as a pair of diamond earrings depends on their continuance as a pair or set, the value is drastically diminished if one of the pair or set is damaged or destroyed. 

Naturally, the insured would prefer to abandon the remaining earring to the underwriter and to claim a total loss. By inserting Pair & Set Clause, the insurer limits his liability to the insured value of the damaged part or lost object.

·         PAIN AND SUFFERING

Refers to the suffering attributable to the injury sustained by the person in an accident and to any consequential surgical operation. This is one of the heads of damages allowed in relation to any motor third party insurance claim. 

Past and future suffering, pain, duration and its severity are taken into account. Damages are given both for mental and physical pain and suffering.

·         PAID LOSSES

Total amount of all the losses paid by an insurance company in a given period.

·         PACKING LIST

Statement furnishing details of the contents of a package or a container. This document is required by the insurer in case of a claim for shortage of contents in the package caused during transportation and preferred under the relevant cargo insurance policy. Packing List helps for a comparison of the contents packed with the contents received at destination.

·         PACKAGE POLICY

A combination of two or more individual coverage into a single policy. A Householders Comprehensive insurance policy, for example, is a package combining property, personnel and liability coverage for the householder.

·         P.A. FLIGHT COUPONS

Passenger's Flight insurance coupon covers death and/or permanent disability arising out of a bodily injury caused by violent, accidental, external and visible means whilst in or entering into or descending from any aircraft owned and/or operated by a regular airline over a schedule route by which the insured is travelling as a fare paying passenger during the flights specified. Rate of premium is ` 5/- per ` 50,000/- for a flight of not more than 24 hours duration. 

·         PACKAGE

In general insurance, comprehensive insurance scheme, in favor of an individual or an enterprise or an industry covering assets, personnel, interests and liabilities against a bundle of perils.

·         P.P.I.

Policy Proof of Interest. Under an ordinary marine policy the assured has to prove his insurable interest at the time of loss to substantiate a claim. A PPI policy dispenses with the need for the assured to prove his interest at the time of loss. The mere production of the policy is deemed sufficient proof of interest. 

There are certain insurable interests which, although they exist, are difficult to be established or extent of which is difficult to arrive at. Increased value of the cargo is an example of the former and anticipated freight is an example for the latter.

·         POLICIES ISSUED BASIS

When excess of loss reinsurance treaties are concluded on Policies Issued basis, the treaty will only cover those policies that have been issued or renewed at dates falling within the period of the treaty.

 

·         QUOTA SHARE TREATY

This is an agreement whereby the ceding company is bound to cede and the reinsurer is bound to accept a fixed percentage of every risk accepted by the ceding company.

·         QUOTA SHARE POOLS

Market pools are arranged on quota share basis where participating member companies make quota share cessions and then share the entire business according to their participation percentage.

·         QUOTA SHARE CUM SURPLUS TREATY

A method of proportional treaty arrangement combining the quota share treaty and the surplus treaty. For example a risk may be ceded on quota share basis of 50%, 50% being the reinsured retention and 50% ceded to the quota share reinsurer. 

The 50% retained by the reinsured may be further protected by a surplus treaty after fixing the line of retention of the reinsured.

·         QUID PRO QUO

Exchange. In relation to insurance the insurer selling a policy of insurance to some one in consideration of the premium paid by the latter.

·         QUARRELS AND ARBITRATION

In relation to reinsurance, an Arbitration Clause is provided in treaty wordings setting out the mechanism for settling any disputes, quarrels etc. as between the parties to the reinsurance contract by Arbitration.

·         QUARANTINE RESTRICTIONS

As per the Carriage of Goods by Sea Act, the carrier is not responsible for any loss to cargo arising out of the vessel carrying a cargo that is being subject to certain restrictions imposed by the health authorities of the countries involved. 

However the cargo insurer will consider this as a delay beyond the control of the insured and pay the claims for loss or damage to cargo as long as it has been caused by an insured peril.

·         QUALIFIED NURSE

In relation to Medical insurance, means a person who holds a certificate of recognised Nursing Council and who is employed on recommendations of the attending medical practitioner.

 

·         RATE PER MILLE

Rate of premium calculated per thousand of the sum insured.

·         RATE ON LINE

In relation to excess of loss reinsurance, refers to the premium for the excess of loss cover expressed as a percentage of the limit of the excess of loss cover for any one event of loss.

·         RATE ON GNPI

In relation to excess of loss reinsurance, refers to the premium for the excess of loss cover expressed as a percentage of the Gross Net Premium Income. (See " Gross Net Premium Income")

·         RATE OF PREMIUM

The pricing factor upon which the premium payable for a particular insurance cover will be based

·         RATE OF GROSS PROFIT

Gross profit expressed as a percentage of the turnover. In relation to Consequential Loss policy, refers to the rate of gross profit earned on the turnover during the financial year immediately before the date of loss suitably adjusted to provide for trend of the business.

·         RATE OF EXCHANGE

Price of one currency in terms of another.

·         RAM BLOWOUT PREVENTOR

In energy risks, a blowout preventer that uses rams to seal off pressure on a hole that is with or without pipe. It is also called a ram preventer.

·         RAM

In energy risks, the closing and sealing component on a blowout preventer

·         RATABLE PROPORTION OF LOSS

The term relates to treatment of a claim for a loss which is insured under more than one policy. In such a situation settlement will be made each insurer for only his share of the loss, which will be that proportion that the sum insured under his policy will bear to the cumulative sum insured under all the policies involved.

·         R.C.BOOK

Registration certificate of a vehicle confirming ownership of the vehicle. This document indicates insurable interest on the part of the proposer of insurance. This is verified by the surveyor/insurer in case of a road accident claim pertaining to the insured vehicle.

·         RATE GUIDE

Company manual or prospectus furnishing premium rates for various insurance covers as relating to person, property and peril. This will furnish rates for all insurance policies other than those which are subject to tariff rates. (See Tariff Rate). 

The manual is mainly intended for agents who solicit business and will also contain guidelines for their business procurement.

 

·         SALVAGE CHARGES

In relation to Marine insurance, refers to the cost incurred by third parties, independent of any contract, towards salvage operations in saving a distressed vessel. 

Salvage operations will include towage, refloating, uprighting, or raising-up a sunken vessel. Salvage charges do not include the expenses of services in the nature of salvage rendered by the insured or his agents, which would be treated as Sue and Labour charges or general average, depending on the circumstances.

·         SALVAGE ASSOCIATION

An association incorporated in U.K. It is governed by a committee drawn from Lloyd's and Company underwriters. 
Its main activities consist of 
(i) Providing expert advice and supervision of salvage operations 
(ii) Undertaking damage and condition surveys of hull and cargo 
(iii) Supervision of repairs, towage and voyage approvals 
(iv) Site and lay-up surveys 
(v) Oil industry damage surveys 
(vi) Preparing the case for insurers when important litigation is in prospect The services of the Salvage association are available to underwrites, shipowners and others on request from the interested parties. It has offices in many important ports and has a world-wide network of correspondents.

·         SALVAGE

1) Property which is partially saved from loss or damage
2) 2.A compensation for salvage services paid under contract

·         SALESMANSHIP

Art of persuading people to purchase a product or to avail a service.

·         SALE OF VESSEL CLAUSE

Provision in the Institute Hull clauses which provides that the policy is automatically cancelled in the event of change of ownership of the vessel or its management. Continuation of cover in such cases, if agreed by the insurer will be done by the insurer by suitable endorsement on the policy. In case of cancellation, the insured will be entitled for pro rata daily net premium return.

·         SALE CONTRACT

Contract of Sale means contract by which the seller and the buyer agree on the terms and conditions of sale.

·         SAILING VESSELS

These are country crafts propelled by wind power. They are either wooden built or steel built. These vessels are used to carry cargo between Indian ports and also between Indian ports and ports in countries in close proximity to India, such as Sri Lanka, Pakistan, Persian Gulf and East Africa.

·         SAID TO CONTAIN

A term which finds a place in the receipts given by all the carriers in connection with the goods entrusted to them for carriage/transport from one place to another, which are contained in cases or any closed packages. 

It is then the responsibility of the consignor or the consignee to establish to the satisfaction of the carrier about the description and quantity of the goods in the packages, when any shortage of contents, while in the custody of the carrier is alleged by the consignee at the time of delivery.

·         SAFETY AUDITS

A system that brings together the various techniques relating to both the perception of risk and the identification of operative cause and perils. It has been defined as 'a critical examination of an industrial operation in its entirety to identify potential hazards and levels of risk'. 

·         SABOTAGE

Destruction of productive capabilities in a plant or factory by those opposed to a company management. 

Sabotage is a malicious act and loss sustained by the insured arising out of the destruction of the insured property by sabotage is recoverable under the malicious act extension.

 

·         TELEVISION INSURANCE

Insurance cover for T.V. apparatus and antenna as also to VCR against fire and allied perils, riot and strike, any other accidental damage by external means, mechanical and electrical breakdown, burglary, housebreaking and theft. 

Cover is also provided against third party liability of the insured or loss to his own surrounding property arising out accidents caused by or through the insured item. 

Differential rates of premium are applied by the insurer depending upon whether the equipment is for personal or commercial use and also if let on hire.

·         TEARING APART ON ACCOUNT OF CENTRIFUGAL FORCES

The term refers to insured machine/equipment/apparatus splitting into factions due to the force tending to pull it outward when it is rotating rapidly around the centre. This contingency is not covered under the explosion coverage part of a standard Fire and Special Perils policy.

·         TAXYING (AIRCRAFT)

Deemed to include all movement of the aircraft under its own power other than for the purpose of flight. Taxying shall not be deemed to cease merely by reason of the temporary halting of the aircraft in the course of taxying from one point to another

·         TAX TOKEN

Token issued by RTO for having paid required tax for the vehicle. Strictly speaking, payment or non-payment of tax does not vitiate insurance contract and liability under the policy does not get prejudiced.

·         TARIFF RATE

Rate fixed by the Tariff Advisory Committee in respect of specific property / properties and against specific peril/perils, which will have to be scrupulously followed by all insurers. 

In almost all cases the rate fixed by the tariff committee is the minimum to be charged for a given situation, leaving it to the individual insurer to charge more if a specific proposal warrants.

·         TARE

Weight of packing in a consignment or unladen weight in a vehicle or container.

·         TANKERS

Liquid bulk cargo carriers, which are strongly built vessels to carry bulk liquid cargo like crude oil, petrol, molasses etc. The speed of the vessel will be 10 to 15 knots. 

They ply on fixed routes. Collision damage will result in huge losses. Also the risk of fire and explosion during discharge of cargo is more. There are possibilities of pollution risk also.

·         TANK FARM

An area at a refinery, terminal or storage depot dedicated to storage tanks and their safety requirements for surrounding space and spillage containment devices.

·         TANK CONTAINERS

Tank containers usually of stainless steel and of size 8 x 8 x 10 and capacity 4000 liters are used to carry dangerous, corrosive, inflammable and toxic chemical substances. 

These tank containers carry the advantages of easier handling, completely adaptable to integrated transport systems, more effective for volume loading and less expensive than using drums.

·         TALLY SHEET

Document prepared by the port trust officials recording the description of the cargo and the number of packages as the cargo is landed from a vessel. The document will also record wherever a package is landed not in apparently sound condition. 

This is known as "landing tally" and requisitioned by the insurer in case of an import claim under a marine insurance policy to verify whether the package which contained the item claimed for landed in a damaged condition thereby indicating that the loss should have taken place in the custody of the carrier.

·         TAINTING

State of cargo being soiled by atmospheric conditions arising for example from cargo in close proximity giving odors such as oranges tainting tea.

 

·         UNDERWRITING LOSS

Shortfall that results after payment of claims and expenses against the premium received.

·         UNDERWRITER

An insurer; an official in an insurance company whose main responsibility is to perform the functions of underwriting to determine whether the risk proposed for insurance is insurable and if so, at what rates, terms and conditions.

·         UNDERLYING LIMIT

A term used in connection with Excess of Loss treaty. The limit upto which the ceding company would bear the loss due to any one cause or event before invoking the recovery from reinsurer.

·         UNDERINSURANCE

Inadequate insurance coverage in respect of the insured property. This results in the claim admitted under the policy being proportionately reduced.

·         UNALLOCATED BENEFIT

A policy provision providing reimbursement up to a maximum amount for the cost of all extra miscellaneous hospital services, but not specifying how much will be paid for each type of service.

·         UMBRELLA XL

A company may have excess of loss programme for different classes. At the top of each such programme they may have arranged an Umbrella XL. This umbrella will be for all classes. It is with variable underlying for each class equal to the range of top layer in individual class's XL programme. It works as top layer for each class and when more than one class are involved underlying of each class applies separately with a common/combined limit.

·         UNFAIR OR MISLEADING ADVERTISEMENT

"Will mean and include any advertisement: (i) that fails to clearly identify the product as insurance; (ii) makes claims beyond the ability of the policy to deliver or beyond the reasonable expectation of performance; (iii) describes benefits that do not match the policy provisions; (iv) uses words or phrases in a way which hides or minimises the costs of the hazard insured against or the risks inherent in the policy; (v) omits to disclose or discloses insufficiently, important exclusions, limitations and conditions of the contract; (vi) gives information in a misleading way; (vii) illustrates future benefits on assumptions which are not realistic nor realisable in the light of the insurer's current performance; (viii) where the benefits are not guaranteed, does not explicitly say so as prominently as the benefits are stated or says so in a manner or form that it could remain unnoticed; (ix) implies a group or other relationship like sponsorship, affiliation or approval, that does not exist; (x) makes unfair or incomplete comparisons with products which are not comparable or disparages competitors.

·         ULTRA VIRES

Beyond power or authority

·         ULTIMATE NET LOSS CLAUSE

A clause appearing in the excess of loss reinsurance wordings to the effect that the total sum actually paid by the reinsured in settlement of losses including loss expenses, loss salvages and recoveries including recoveries from treaties shall insure to the benefit of the excess of loss cover.

·         ULTIMATE NET LOSS

The term used in excess of loss reinsurance for the total sum paid by the ceding company in settlement of its liabilities, other expenses excluding office expenses and salaries, less salvage/recoveries and all other reinsurance recoveries.

 

·         VETERINARY HEALTH CERTIFICATE

Certificate issued by a qualified veterinarian on the health and value of the animal. This is obtained at the time of insurance so that healthy animals are only insured and for their real value.

·         VEHICLES SUBJECT TO LEASE AGREEMENT

It is not permissible to issue policies in the joint names of lessee and lessor. Policies must be issued in the name of lessee and the lessors interest protected by the use of appropriate endorsement.

·         VEHICLES SUBJECT TO HYPOTHECATION AGREEMENT

It is not permissible to issue policies in the joint names of pledge and registered owner of the vehicle. Policies must be issued in the name of registered owner of the vehicle and the pledges interest protected by the use appropriate endorsement.

·         VARIABLE QUOTA SHARE TREATY

In a quota share treaty there may be retention with maximum say 20%. This would mean that on certain risks retention can be lower than this percentage. This is termed as variable quota share. There will be corresponding variation with regard to maximum reinsurance in respect those risks.

·         VARIABLE EXPENSES

Cost or expenses which vary in proportion to the quantum of production or the volume of turnover. Variable expenses are eliminated while computing the gross profit of a business for the purpose of fixing the sum insured under a business interruption or the consequential loss policy.

·         VALUED POLICY

Contracts of insurance where the sum insured in respect of the insured property is deemed to be the actual value of the property throughout the currency of insurance. 

Claims in respect of total loss are settled without any adjustment which may otherwise arise on such considerations as adequacy of the sum insured, market value, etc. 

Marine insurance policies both for cargo and hull are all "valued policies". As regards policies like Fire and Burglary policies this facility is extended in respect of valuables, paintings, pictures, curios, antiques and other works of art.

·         VALUE

The worth of the property to be insured or of that which has been lost or damaged. 

·         VALUATION CLAUSE

A clause which appears in the institute time clauses and other hull clauses which provides that the insured value is to be taken as the repaired value for constructive total loss purposes and nothing in respect of break up value is to be taken into account.

·         VALID CONTRACT

A contract which can be enforced in a court of law.

·         VEHICLES LAID UP

Refers to a comprehensively insured motor vehicle being laid up in garage and not in use. Subject to a notice from the insured in advance of the period during which the vehicle will be laid up, insurer will restrict the cover during the laid up period to fire, burglary and theft risks only. 

The insured consequently will get either of the following benefits - 

1. A portion of the premium already collected by the insurer will be given to the credit of the insured at the time of renewal of the policy or 

2. The existing policy will be extended by a period equivalent to the laid up period by charging an extra premium which will represent the premium for the restricted cover during the laid up period.

 

·         WARSAW CONVENTION

The Warsaw Convention, signed in 1929, is an international agreement governing the liability of the air carrier in case of damage caused to passengers baggage and booked cargo carried from one country to another. This convention now stands amended as Hague Protocol from 1963. 

The high contracting parties of the convention have given effect to the convention by enacting a legislation in their countries generally called Carriage by Air Act. 

The Indian Carriage By Air Act, 1972 which embodies the provisions of the convention limits the liability of the air carrier to a sum of 250 francs per kilogram of package weight unless the consignor declares the value of the consignment at the time of entrustment to the carrier.

·         WARRANTY

An undertaking by the insured that: 

(a) Something shall be done 
(b) Something shall not be done 
(c) A certain state of fact exists 
(d) A certain state of fact does not exist

·         WARRANTED UNDERDECK

Incorporation in the Marine Cargo Insuraance policy, of a promise or undertaking given by the insured to the effect that the insured cargo shall be carried under deck only. Breach of this warranty will enable the insurer to avoid the contract.

·         WAREHOUSE-KEEPERS

Individuals or organizations who receive the goods for the purpose of storage in their warehouses. They are supposed to exercise due care and diligence in the storage of goods. They are entitled to payment for their services. 

They have a lien on the goods for the charges payable to them and consequently have an insurable interest in the goods.

·         WAREHOUSE TO WAREHOUSE COVER

The voyage through which the cargo is to be moved commences from the sellers warehouse and terminates on arrival at buyers warehouse. Since the cover for cargo encompasses this entire movement from the sellers warehouse to the buyers warehouse, it is called as warehouse to warehouse cover. 

This means that the scope of the cargo cover is extended to take care of the interior transits at both ends of ocean transit as well. (See also "Transit Clause")

·         WAR RISKS TIME POLICY-GOVERNMENT OF INDIA AND SCHEME FOR MARINE HULLS

A scheme of the Government of India for insuring Indian hulls against war and strikes risks. The scheme is applicable to all ships registered under the Merchant Shipping Act, 1958. 

The scheme also applies to ships otherwise qualifying for registration, which are under construction or are purchased from foreign owners from the time they are at the risk of Indian owners. 

The scheme also applies to mechanized sailing vessels. This is a voluntary scheme and is left to the shipowner to participate or not. Policies are issued by any of the Indian insurers

·         WAIVER OF SUBROGATION

A clause relevant to policies, issued in favour of two or more parties, who have financial interest and/or involvement in the subject matter of insurance, whereby the insurer consents to waive all rights of subrogation or action which he may have or acquire against any of the insured arising out of any occurrence in respect of which a claim is admitted under the policy

·         WAIVER

Voluntary relinquishment of known right. It may arise when a person knowing of a right that has accrued to him, fails to take advantage of the right within a reasonable time. In case of a breach of a condition or warranty by the insured, the insurer does not take note of that and give notice to that effect he is deemed to have waived his right.

·         WAITING PERIOD

A period mentioned as 'waiting period' in the policy during which any loss-taking place is not recoverable under the policy.

·         WAGERING CONTRACTS

A contract of Marine insurance where the insured has no insurable interest in the subject matter insured nor has any expectation of acquiring such interest anytime during the insurance is in force.

·         WARRANTY SURVEYORS

Surveyors who carry out surveys in connection with towing of one vessel by another, to suggest the method of towage, suitability of towing line monitoring of weather conditions during the towage voyages and also the precautions to be taken in case of any untoward incidence. 

The warranty surveyor also approves the condition of the vessel to be towed and the vessel being used for towing depending upon the voyage, distance and capability.

 

·         YORK-ANTWERP RULES

The set of rules, which has been devised as a voluntary code to maintain universal uniformity on treatment of General Average. The provisions of these rules form the basis for General Average adjustments. There is specific incorporation in all the bills of Ladings agreeing for adoption of these rules. 

Underwriters, world over approve these rules in connection with consideration of General Average related claims under their polices. These rules were first coded in 1890 and have undergone few amendments over the period to take care of developments that have taken place in the implementation of these rules.

·         YIELD

This refers to the ratio that income from an investment bears to the cost/face value of the investment. In the case of a 14% Debenture of face value of ₹100/-, the income will be ₹14 per annum on the investment of ₹100 and hence the yield is 14% if the debenture is acquired at ₹100. In case the same is acquired at a price of ₹ 110, the income in a year will be ₹14 on an investment of ₹ 110 and hence the yield will be 14/110x100. This is called current yield of the investment.

·         YEAR OF ACCOUNT BASIS

This term relates to an accounting methodology practiced in connection with reinsurance transactions. In this category are accounts that deal with premiums and losses in the year under review irrespective of the year of origin of the cession or of the loss.

 

·         ZONE B

In relation to application of premium rates prescribed in the All India Motor Tariff, refers to one of two zones of operation of the motor vehicle which comprises of: Other  than regions covered by Zone A, namely: Calcutta  region, Delhi region and "Mumbai"

·         ZONE A

In relation to application of premium rates prescribed in the All India Motor Tariff, refers to one of two zones of operation of the motor vehicle which comprises of: Madras  region and Mumbai region excluding "Mumbai"