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