Glossary

Glossary

  • Accident

    While the word seems clear enough, what exactly constitutes and accident is a much haggled over concept. The exact interpretation will dependend on the legislation that applies but in general terms the following elements are typically important for this concept (and any of hope of coverage) to apply: the occurrence must be unintended, unforeseen, unexpected.

  • Accident & Sickness Insurance

    Confusingly also known as accident and health this is a generic term for coverage that protects from loss because of illness or injury which may result in loss of life, loss of earnings, or expenses incurred.

  • Accident Experience

    Contrary to what one might expect this is not about how enjoyable the accident was but relates to the frequency and severity of claims under a policy. It is also called claims experience.

  • Act Of God

    An event beyond human origin or control. The volcanic ash cloud which created substantial air travel disruption in April 2010 is a typical, if extreme, example of an Act of God.

  • Admitted

    Two different meanings exist: Admitted / non-admitted can refer to whether or not a country requires an insured to purchase insurance from an insurer licensed in this country. This has now become an important topic as compliance with local tax rules and other regulations is becoming more of an issue for multinational programs. In the US this also refers to a foreign insurer licensed by the insurance department of the state in question.

  • Advertising Injury

    Can arise from libel, slander, copyright infringements etc in the course of advertising products or services

  • Amount Subject

    Is also known as maximum possible loss (MPL) this is a worst-case approach to estimating the percentage of insured property which could possibly be destroyed by the insured perils.

  • AR

    All Risks

  • ART

    Alternative Risk Transfer: General term for non-traditional methods of risk transfer (captives, use of financial markets etc)

  • Assumed Liability

    Unlike legal or statutory liability this refers to liability assumed under contract or a similar agreement between parties.

  • Bankers Blanket Bond (BBB)

    Covers banks against loss from employee dishonesty, burglary, robbery, etc and other perils.

  • BAR

    Builders All Risks

  • BBB

    Bankers Blanket Bond covers banks against loss from employee dishonesty, burglary, robbery, etc and other perils.

  • BC

    Burning Cost

  • BI

    Can stand for either Business Interruption or Bodily Injury

  • Binder

    Usually in written form but can be oral as well this is an agreement to provide coverage, acting in fact like a temporary policy until such time that the policy documents themselves have been drawn up. Striving for contract certainty should reduce the necessity of using binders.

  • Boiler & Machinery

    Also called Machinery Breakdown. Covers loss to the equipment itself, damage to other property, business interruption or all three following an insured peril.

  • BORL

    Broker of record letter

  • Broker Of Record Letter

    A broker of record letter (BORL) is a written statement signed by an insured advising an insurer that a particular broker or agent shall act as the insured’s representative. Wordings and usage of these BORL's differ substantially from country to country and, in some countries, will depend on the situation at hand.

  • CAR

    Contractors’ “All Risks”/Construction “All Risks”

  • Care, Custody, Control (Ccc)

    Coverage for damage to property in the care, custody or control of the insured. Classical example is a garage: cars to be repaired are not the property of the insured, but if a car is damaged the insured will be liable. Typically excluded from standard liability policies.

  • CAT

    Catastrophe

  • CBI

    Contingent Business Interruption

  • CCC

    Care, Custody and Control: coverage for damage to property in the care, custody or control of the insured. Classical example is a garage: cars to be repaired are not the property of the insured, but if a car is damaged the insured will be liable. Typically excluded from standard liability policies.

  • CCIP

    Contractor controlled insurance program: all participants involved in a building project are covered by this single policy taken out by the contractor. The policy provides coverage for the project owner as well as contractors and subcontractors that are working on the job site. As with owner controlled insurance programs, the idea is that the single policy will save costs, streamline coverage and facilitate claims handling.

  • CECR

    Civil Engineering Completed Risk Insurance

  • CEND

    Confiscation, expropriation, nationalization and deprivation. These are known as political risks.

  • CGL

    Comprehensive General Liability (US) Broad coverage for commercial risks, usually covering all liability exposures except those specifically excluded

  • Claims Made

    Coverage is triggered if the claim is made during the policy period (unlike occurrence basis). A joy for claims specialists, the concept is usually complicated by various other stipulations.

  • CMI

    Comprehensive Machinery Insurance [A Munich Re policy form with a compulsory sectionon operational material damage and an optional section for business interruption]

  • CMR

    Convention on the Contract for the International Carriage of Goods by Road (CMD 3455)

  • CMR Form

    Lloyd’s Goods in Transit (CMR) Policy

  • COC

    Cost of Control [Sometimes used instead of COW]

  • Combined Single Limit (CSL)

    Typically applies to liability policies and combines Property Damage and Bodily Injury amounts insured into one amount insured.

  • Completed Operations

    Important for contractors, this covers damage caused by work performed after it has been completed and handed over. Comparable to products liability.

  • Comprehensive General Liability (CGL)

    (US) Broad coverage for commercial risks, usually covering all liability exposures except those specifically excluded

  • Consequential Financial Loss

    see Financial Loss

  • Contingent Motor Liability

    Liability for cars not owned by the insured but being used by an employee in connection with the insured's business

  • Contractor Controlled Insurance Program

    Also known as CCIP: all participants involved in a building project are covered by this single policy taken out by the contractor. The policy provides coverage for the project owner as well as contractors and subcontractors that are working on the job site. As with owner controlled insurance programs, the idea is that the single policy will save costs, streamline coverage and facilitate claims handling. Also see OCIP, owner controlled insurance programs.

  • Control Of Well

    (COW) This coverage was developed to address the uncontrolled escape of gas or oil from a well bore. There are three main sections of coverage: control costs, costs for re-drilling, and costs for seepage and pollution liability. Coverage is triggered by a "well out of control".

  • COW

    Control of Well: This coverage was developed to address the uncontrolled escape of gas or oil from a well bore. There are three main sections of coverage: control costs, costs for re-drilling, and costs for seepage and pollution liability. Coverage is triggered by a "well out of control".

  • CP

    Comprehensive Project Insurance A Munich Re form made up of four sections. Section 1a – Project Works(which is compulsory under this form), Section 1b – Plant, machinery and equipment, Section 2 – Third party liability, Section 3 – Delay in start-up, Section 4 – Marine cargo.

  • Cross Liability

    Important in policies with more than one insured. Typically used to clarify whether the insureds can claim against each other under the same policy or not.

  • CSL

    Combined Single Limit. In liability policies this combines PD and BI into one sum insured.

  • D&O

    Directors’ & Officers Liability. Crucial protection for directors and officers of a company (including not-for-profit) for negligence claims or wrongful acts.

  • DE

    Stands for both Damage to Existing/Surrounding Property and Defects Exclusion

  • Decennial Liability

    10 year liability in construction, particularly thorny in France and Belgium

  • DIC

    Difference in Conditions in the context of a master policy above a local policy, provides the broader coverage of the master to the insured under the local policy. See DIL for difference in limits

  • DIE

    Difference in Excesses

  • Difference In Conditions (DIC)

    In the context of a master policy above a local policy, DIC provides the broader coverage of the master to the insured under the local policy. See DIL for a difference in limits.

  • Difference In Limits (DIL)

    In the context of a master above a local policy, DIL increases the limits of the local policy by supplying additional amounts through the master. See DIC for difference in conditions

  • DIL

    In the context of a master above a local policy, DIL increases the limits of the local policy by supplying additional amounts through the master. See DIC for difference in conditions

  • Directors & Officers (D&O)

    Crucial protection for directors and officers of a company (including not-for-profit) for negligence claims or wrongful acts.

  • DOL

    Date of Loss

  • E&O

    Errors & Ommissions

  • E&S

    Excess & Surplus Lines Insurance

  • EAR

    Erection All Risks Insurance

  • ECGD

    Export Credits Guarantee Department

  • EED

    Energy Exploration and Development [Policy form for Control of Well insurance introduced by the London Rig Committee in 1985 to overcome problems of ‘kicks’ under OEE policy forms. The form was revised a year later and become the standard policy wording identified as the EED (8/86) form]

  • EEL

    Each and Every Loss

  • EEOL

    Each and Every Other Loss

  • EER

    Each and Every Risk

  • EIL

    Environmental Impairment Liability: liability coverage for PD/BI claims arising from environmental impairment (pollution)

  • EL

    Employers’ Liabilty: covers statutory liability with respect to employee injury

  • EML

    Estimated Maximum Loss

  • Employers' Liability

    Covers statutory liability with respect to employee injury. Not the same as Employment Practices Liability

  • Employment Practices Liability (EPLI)

    Covers the employer for employee claims re discrimination, harassment and wrongful dismissal.

  • Environmental Impairment

    Environmental Impairment Liability: liability coverage for PD/BI claims arising from environmental impairment (pollution)

  • EPC

    Engineer-Procure-Construct/Engineering, Procurement and Construction

  • EPLI

    Employment Practices Liability Insurance: covers the employer for employee claims re discrimination, harassment and wrongful dismissal.

  • Excess

    Applies to that portion of a loss or damage which exceeds a specified amount. The attachment point is usually more than a million dollars

  • Exemplary Damages

    Usually describes punitive damages, ie damages awarded by a court to punish the guilty party in a law suit. Typically excluded or not insurable at all.

  • FAC

    Facultative

  • FAC R/I

    Facultative Reinsurance

  • FAC/OBLIG

    Facultative/Obligatory

  • Financial Loss

    Typically, there is a distinction between three types of financial loss: a) consequential - this follows bodily injury or property damage to third parties, many policies provide coverage for this b) following non-insured bodily injury or property damage. In this situation, the BI and PD aren't covered and therefore the resulting financial loss is not covered either unless covered as in c below c) pure financial loss describes situations where there is no BI and/or PD. Usually this requires a coverage extension.

  • FLEXA

    Fire, Lightning, Explosion, Aircraft [standard perils for property insurance]

  • FLOP

    Fire Loss of Profit

  • FM

    Force Majeure

  • FOB

    Free on Board

  • FSA

    Financial Services Authority [UK’s regulatory authority.]

  • General Liability

    US term for Public or Operations Liability

  • GIT

    Goods in Transit

  • GL

    General Liability, the US term for Public or Operations Liability

  • GPI

    Gross Premium Income

  • Gross Earnings

    The overall earnings (taxable) without any exclusions or deductions

  • Gross Profits

    In business interruption refers to gross receipts less the cost of goods or production but before the deduction of such other costs as rent or salaries

  • HPR

    Highly Protected Risk

  • IBNR

    Incurred but not reported (refers to claims)

  • ICW

    Increased Cost of Working: coverage provided for additional costs to get work done after a claim has occurred, for example, if part of a production plant is destroyed but production levels can be maintained by working two shifts or overtime, then the additional wage costs associated with the two shifts or overtime would be covered

  • Increased Cost Of Working

    Increased Cost of Working: coverage provided for additional costs to get work done after a claim has occurred, for example, if part of a production plant is destroyed but production levels can be maintained by working two shifts or overtime, then the additional wage costs associated with the two shifts or overtime would be covered

  • Interdependency

    Also known as suppliers extensions and interdependency. Provides coverage in the event that a major supplier suffers a loss and is not able to provide the insured with goods needed for the insureds’ production.

  • J (A) FORM

    A Lloyd’s policy jacket not containing a War Clause

  • J FORM

    A Lloyd’s policy jacket containing a pre-printed War Clause

  • J FORMS

    Lloyd's policy jackets to wrap around wordings

  • Lead Insurer

    Typically, the insurer carrying the largest portion of a given risk. This insurer will usually also handle policy administration and claims on behalf of all insurers on the risk.

  • LMP

    London Market Principles [a London market initiative by the Market Reform Group sponsored by Lloyd’s Market Association (LMA), the London Market Insurance Brokers’ Committee (LMBC), the International Underwriting Association (IUA) and Lloyd’s. Effective January 2004 it has become mandatory that slips have to include: a Unique Market Reference, risk details, a Subscription Agreement, information provided to the underwriter to support the assessment of the risk and fiscal and regulatory details. The standard LMP slip ensures clarity and completeness of contractual terms, improved quality of insurance documentation and improved service to brokers and policyholders]

  • LOP

    Loss of Profit

  • Machinery Breakdown

    Also known as Boiler & Machinery. Covers loss to the equipment itself, damage to other property, business interruption or all three following an insured peril.

  • MD

    Material Damage

  • MLOP

    Machinery Loss of Profit

  • Motor

    UK term for auto

  • MPL

    Maximum Possible Loss

  • NBI

    Non Binding Indication Insurance terms that are subject to change or withdrawal by the underwriter at anytime prior to commencement of cover. NBI will be subject to full support of the following market and underwriters’ satisfaction with the information required

  • Non Binding Indication

    Insurance terms that are subject to change or withdrawal by the underwriter at anytime prior to commencement of cover. NBI will be subject to full support of the following market and underwriters’ satisfaction with the information required

  • Non-Admitted

    Two different meanings exist: Admitted / non-admitted can refer to whether or not a country requires an insured to purchase insurance from an insurer licensed in this country. If no such requirement exists, non-admitted is allowed. In the US non-admitted refers to a foreign insurer not licensed by the insurance department of the state in question.

  • Non-Owned Auto

    Covers auto liability for cars not owned (or rented) by the policy holder. For companies this also covers liability for an employee using their personal car while on business.

  • Occurrence Basis

    Coverage is triggered if the cause of the claim occurs during the policy period (unlike claims made).

  • OCIP

    Owner Controlled Insurance Program: The owner buys insurance for all participants in a construction project. The owner then requires the participants to reduce their price by eliminating all of their insurance costs in exchange for owner-provided coverage. The owner expects this to result in a lower cost of insurance and, since all coverage will be with the same insurer, coherent coverage and faster claims handling.

  • ODL

    Outside Directors Liability

  • OEE

    Operators Extra Expense a composite package policy that included cover control of well and direct physical loss or damage to the properties of the insured as well as general and pollution liabilities

  • Operators Extra Expense (OEE)

    A composite package policy that included cover control of well and direct physical loss or damage to the properties of the insured as well as general and pollution liabilities

  • Owner Controlled Insurance Program

    Also known as OCIP: The owner buys insurance for all participants in a construction project. The owner then requires the participants to reduce their price by eliminating all of their insurance costs in exchange for owner-provided coverage. The owner expects this to result in a lower cost of insurance and, since all coverage will be with the same insurer, coherent coverage and faster claims handling.

  • P/C

    Property and Casualty

  • P&I

    Protection & Indemnity

  • PA

    Personal Accident

  • PD

    Property Damage

  • PI

    Most often stands for Professional Indemnity but is also used for Personal Injury and Prize Indemnity

  • PL

    Product Liability

  • PL

    Public Liability

  • PML

    Probable Maximum Loss

  • Primary

    Insurance coverage that responds first to a claim and which covers from the first dollar of a loss (but may be subject to a deductible).

  • Public Utilities

    Extension in coverage that pays the insured in the event that their operations are stopped due to problems with a public regulated entity (for example water, sewage, power, etc.).

  • Pure Financial Loss

    For liability see Financial Loss

  • Q/S

    Quota Share

  • R/I

    Reinsurance

  • Rejection Insurance

    For the uninitiated, the availability of such insurance may seem like excellent news. Sadly, this is not what one might hope it is: Rejection insurance covers cargo for the risk of rejection or condemnation by the government (i.e. customs or other agencies) of the importing country. Rejection insurance can typically only be provided with cargo cover. This relates to foodstuffs and, particularly, to seafoods.

  • S&P

    1) Seepage & Pollution 2) Standard & Poor's

  • S&T

    Sabotage & Terrorism

  • Schengen Visa Insurance

    A bulky name to say that you need valid health & repatriation insurance underwritten for at least the legally defined limit by an insurer with a presence in Europe when you apply for a Schengen visa. The Schengen Area is a group of twenty-five European countries which have abolished all border controls between each other.

  • Self-Insured Retention

    Acts like a deductible but is usually a much larger amount than a typical deductible. Essentially, this is the part of a loss financed by the insured.

  • SI

    Sum Insured

  • SRCC

    Strike, Riot and Civil Commotion

  • Suppliers Extension

    Also known as interdependency. Provides coverage in the event that a major supplier suffers a loss and is not able to provide the insured with goods needed for the insureds’ production.

  • Takaful

    Takaful is an Islamic insurance concept which is grounded in Islamic law. It is similar to mutual insurance and cooperative risk sharing but there are key differences including a clear segregation of funds owned by participants and those owned by the insurance operations entity. This is a growing market in the insurance world, estimated to exceed $10 billion by 2010.

  • Time Element

    A form of deductible for business interruption coverage expressed in time as opposed to an amount of money. For example, a 72 hour deductible means that the insured must have operations shut down for 3 days before insurance coverage applies. If the loss is longer, the costs incurred for 3 days will be deducted from the final payment.

  • TPFT

    Third Party, Fire & Theft

  • TPL

    Third Party Liability

  • TPPD

    Third Party Property Damage

  • TSI

    Total Sum Insured

  • U/W

    Underwriter

  • Umbrella

    Common type of excess insurance. It not only exceeds a specified amount, but also provides coverage in addition to the primary insurance coverage. Typically an umbrella will exceed more than one primary policy, for example it may go over the liability, auto liability, and errors and omissions coverage all in one excess policy

  • WC

    Workers compensation

  • XL

    Excess Liability/Excess of Loss

  • XS

    Excess

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