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General Insurance Glossary

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Unforeseen, Unintended, Unexpected & Fortuitous event causing Loss of Property, Loss of use of Property & / or Life.

Agreed Value Policy

When the value of the subject matter insured is definitely decided and agreed between the parties in the contract the insurer and insured before the inception of the issuance of policy.


A clause under which the insured has to insure to full value of a property or share the losses with the insurer.


Maintaining silence when obligated to speak.


In insurance Coverage means that the losses caused by the perils are indemnified and the insurance policy responses positively in case of such losses.


Allow exclusion (inclusion) of cover, at the option of the insured for a reduced (an additional) premium for individual perils on a case-by-case basis.


Financial compensation sufficient to place the insured in the same financial position after a loss as he enjoyed immediate before it occurred. Indemnity relies heavily on evaluation and valuation and indemnity must not exceed the value of the subject mater just before the loss.


Transfer or shifting risk from an individual to a group and sharing losses on an equitable basis by all members of the group. Insurance is a contractual agreement whereby one party agrees, for a consideration called premium, to compensate another party for losses.

Insurable Interest

There must be some property, right, interest, life, or liability capable of being insured. It must be the property, life, interest etc, which must be the subject mater of insurance. There must be a relationship between the insured and the subject mater of insurance i.e. insured must benefit from the safety, well being or freedom from liability and would be prejudiced by its loss, damage or the existence of liability. The above relationship must be recognized by law.

Loss Exposer

Implies, situations or persons facing the possibility of loss. Properties, products, persons, health, profits, images etc. are exposed to loss.

Moral Hazard

The dishonesty of an insured person leading to increase probability of loss from of given risk exposure is considered as a moral hazard. For example, an insured person setting fire to the house for claiming insurance benefits.

Morale Hazard

It refers to an attitude of indifference to losses that result out of a known fact that the said losses where insured.


If any thing related to subject mater is not disclosed to the Insurer by the Insured and for which the Underwriting judgment can become prejudiced.


A peril is defined as the cause of the loss, for example loss caused by fires, earthquakes, Heart attacks, and Criminal acts.

Physical Hazard

Anything of physical nature & condition that can aggravate the risk-vis the loss, like Construction, Occupation, Protection and External exposure in property risk.

Proximate Clause

In insurance terminology, the proximate cause of loss is the first peril in a chain of events resulting in a loss.

Policy Condition

Conditions which must be complied with by the insured before a insured loss and a claim is made. It can be expressed in the policy and also can be implied as regard to any act & / or common law.

Policy Exclusion

This defines when the insurance policy does not response and restricts the policy cover.

Reinstatement Value Policy

A method of providing indemnity refers to property insurance where an insurer undertakes to restore or rebuilt a building or piece of machinery damaged by fire or a whole range of different perils or by breakdown under an engineering policy.


A schedule of an insurance policy contains information relating to particular contract i,e Insured and his / her address , Policy number , Issuing office & Insurer , Premium & rate , Risk covered , Agency , period of insurance and subject matter of insurance with sum insured etc .

Subject Matter

The subject matter of insurance can be any type of property or any event that may result in a loss of a legal right or the creation of a legal liability.

Subrogation & Contribution

It is based on the law of equity and corollary to indemnity. Here the insurer after indemnifying the insured for any loss , within the scope of the contract / policy , becomes entitled to recover from any liable third party who is / are responsible for the loss caused to the insured . This gives right to the insurer to place the burden of loss on the shoulders of those responsible, so that the negligent can not escape the penalty because of insurance. Modification of subrogation is Contribution to abide by the principle of indemnity and it gives the insurer certain rights to recovery or limit of liability towards claim amount payable.

Sum Insured

The maximum amount of liability of the insurer as specified in the policy towards claim payable to the insured in case of total loss.

Almost Good Faith

Like every contract insurance is also subject to the doctrine of caveat emptor, which means as A positive duty voluntarily to disclose, accurately and fully, all facts material to the risk being proposed, whether requested or not. The peculiarity in insurance contract is that the insured knows everything and the insurer knows nothing / very little about the risk being proposed and hence utmost good faith is more relevant as representation , warranties , concealment and mistakes in the context of breach of duty of utmost good faith make the contract void .

Unvalued Policy

Specifically described in Marine Insurance Act 1906 (U.K) and MIA 1963, India .Insurable value of unvalued policy is valued and determined as per the formula given in the act.