Glossary of Insurance Terms

TERMS	DESCRIPTION
Ab initio	Latin term meaning “from the beginning”. Usually used in reference to contracts to indicate their existence or validity relates back to their creation like an (unlawful) contract ‘ab initio’ meaning the contract was void during its entire alleged existence.
Abandonment	Deliberate voluntary relinquishment of property or a right, normally because the expense involved in salvaging or recovering the property or right would be greater than its value once recovered or preserved. Also known as Constructive Total Loss.
Accident	An event or happening which is unforseen and unintended.
Accommodation Business	Insurance risks which are accepted by an insurer, not necessarily because the underwriter believes that they are a good underwriting proposition, but more to assist or support a broker whose relationship or volume of business the underwriter values.
Act of God	An event or happening which is generally considered as being beyond human control (earthquake, lightning, flood, cyclone or other natural event).
Accumulation	A concentration of risk where an insurer may find it has multiple risks of the same category or geographic location which substantially increases the overall exposure.
Actual Total Loss	A loss is generally defined as an actual total loss where the subject matter of the insurance is either totally destroyed or changed to be unable to be used effectively.
Ad valorem	Latin term meaning “in proportion to the value”. The term is generally used in commerce in reference to certain duties, called ad valorem duties, which are levied at certain rates per cent on the value of the subject matter.
Ad valorem	Latin term meaning “in proportion to the value”. The term is generally used in commerce in reference to certain duties, called ad valorem duties, which are levied at certain rates per cent on the value of the subject matter.
Ad valorem	Latin term meaning “in proportion to the value”. The term is generally used in commerce in reference to certain duties, called ad valorem duties, which are levied at certain rates per cent on the value of the subject matter.
Ad valorem	Latin term meaning “in proportion to the value”. The term is generally used in commerce in reference to certain duties, called ad valorem duties, which are levied at certain rates per cent on the value of the subject matter.
Ad valorem	Latin term meaning “in proportion to the value”. The term is generally used in commerce in reference to certain duties, called ad valorem duties, which are levied at certain rates per cent on the value of the subject matter.
Ad valorem	Latin term meaning “in proportion to the value”. The term is generally used in commerce in reference to certain duties, called ad valorem duties, which are levied at certain rates per cent on the value of the subject matter.
Ad valorem	Latin term meaning “in proportion to the value”. The term is generally used in commerce in reference to certain duties, called ad valorem duties, which are levied at certain rates per cent on the value of the subject matter.
Ad valorem	Latin term meaning “in proportion to the value”. The term is generally used in commerce in reference to certain duties, called ad valorem duties, which are levied at certain rates per cent on the value of the subject matter.
Ad valorem	Latin term meaning “in proportion to the value”. The term is generally used in commerce in reference to certain duties, called ad valorem duties, which are levied at certain rates per cent on the value of the subject matter.
Ad valorem	Latin term meaning “in proportion to the value”. The term is generally used in commerce in reference to certain duties, called ad valorem duties, which are levied at certain rates per cent on the value of the subject matter.
Ad valorem	Latin term meaning “in proportion to the value”. The term is generally used in commerce in reference to certain duties, called ad valorem duties, which are levied at certain rates per cent on the value of the subject matter.
Ad valorem	Latin term meaning “in proportion to the value”. The term is generally used in commerce in reference to certain duties, called ad valorem duties, which are levied at certain rates per cent on the value of the subject matter.
Ad valorem	Latin term meaning “in proportion to the value”. The term is generally used in commerce in reference to certain duties, called ad valorem duties, which are levied at certain rates per cent on the value of the subject matter.
Ad valorem	Latin term meaning “in proportion to the value”. The term is generally used in commerce in reference to certain duties, called ad valorem duties, which are levied at certain rates per cent on the value of the subject matter.
Ad valorem	Latin term meaning “in proportion to the value”. The term is generally used in commerce in reference to certain duties, called ad valorem duties, which are levied at certain rates per cent on the value of the subject matter.
Ad valorem	Latin term meaning “in proportion to the value”. The term is generally used in commerce in reference to certain duties, called ad valorem duties, which are levied at certain rates per cent on the value of the subject matter.
Ad valorem	Latin term meaning “in proportion to the value”. The term is generally used in commerce in reference to certain duties, called ad valorem duties, which are levied at certain rates per cent on the value of the subject matter.

TERMS	DESCRIPTION
Ab initio	Latin term meaning “from the beginning”. Usually used in reference to contracts to indicate their existence or validity relates back to their creation like an (unlawful) contract ‘ab initio’ meaning the contract was void during its entire alleged existence.
Abandonment	Deliberate voluntary relinquishment of property or a right, normally because the expense involved in salvaging or recovering the property or right would be greater than its value once recovered or preserved. Also known as Constructive Total Loss.
Accident	An event or happening which is unforseen and unintended.
Accommodation Business	Insurance risks which are accepted by an insurer, not necessarily because the underwriter believes that they are a good underwriting proposition, but more to assist or support a broker whose relationship or volume of business the underwriter values.
Act of God	An event or happening which is generally considered as being beyond human control (earthquake, lightning, flood, cyclone or other natural event).
Accumulation	A concentration of risk where an insurer may find it has multiple risks of the same category or geographic location which substantially increases the overall exposure.
Actual Total Loss	A loss is generally defined as an actual total loss where the subject matter of the insurance is either totally destroyed or changed to be unable to be used effectively.
Ad valorem	Latin term meaning “in proportion to the value”. The term is generally used in commerce in reference to certain duties, called ad valorem duties, which are levied at certain rates per cent on the value of the subject matter.
Additional Cost of Working / Increased Cost of Working	The increased costs incurred after a property damage loss, to limit any reduction in turnover or revenue, and to maintain normal business operations. These expenses could include such items as hiring alternate premises, temporary staff, additional freight or storage etc. (Most policies limit the amount they will pay for these costs to the amount that is being saved in turnover or revenue – i.e. you cannot spend more than a dollar to save a dollar).
Additional Increased Cost of Working	The increased costs incurred after a property damage loss, above those payable under the standard cover for Increased Cost of Working. These will generally include any reasonable costs irrespective of whether they limit any reduction in turnover or revenue. These additional increased costs are often expended to keep or regain market share, and to maintain normal business operations.
Ad valorem	The increased costs incurred after a property damage loss, above those payable under the standard cover for Increased Cost of Working. These will generally include any reasonable costs irrespective of whether they limit any reduction in turnover or revenue. These additional increased costs are often expended to keep or regain market share, and to maintain normal business operations.
Additional Perils	Additional insured risk which are normally added to a standard set of perils. An example are perils such as storm, flood, impact damage etc which are added to the standard fire perils in a fire insurance policy.
Adjuster	An independent individual or organisation appointed by the insurer, who is responsible for the evaluation, quantification and recommendation for settlement of an insured claim. (This is referred to as “adjusting” the loss”.
Admitted Insurer	An insurer who is licensed or authorised to do business in a particular state or country. The insurer does not necessarily need to have a physical presence in that state or territory.
Advance Profits Insurance	Business interruption coverage for a new premise or operation, based on the expected revenues and profit which will be generated at completion of the project.
Affreightment	the expression usually employed in shipping to describe the contract by which a vessel or the use of it, is let out to hire. The freighter on their part agrees to pay a specified price, called “freight,” for the carriage of the goods or the use of the ship. The contract is expressed in a bill of lading.
Agent	An insurance agent is an intermediary who arranges insurance, but legally acts in the interests of the insurer, not the insured business.
Aggregate Deductible	A deductible applying in some insurance contracts, in which all losses up to an agreed amount in any one period are self insured. The insurer pays claims once the aggregate amount has been exceeded.
Aleatory Contract	A contract whose value to either or both of the parties depends on chance or future events, or where the monetary values of the parties’ performance are unequal. Insurance contracts are aleatory because the policy owner pays premiums to the insurer, and in return the insurer promises to pay benefits if the event insured against occurs. The policyholder pays a premium and may collect nothing from the insurer if no loss occurs. On the other hand, if a loss does occur, the policyholder may collect considerably more than the amount of the premium.
All Risks Insurance	Coverage under an insurance policy where all losses are insured, unless they are specifically excluded. (N.B. A number of insurers and legal counsel have advised against the use of the term “all-risk” due to its ambiguity).
Amount Subject	The maximum value of insured property which insurers believe could be destroyed by any insurable event no matter how catastrophic. Generally used in underwriting large risks in order to compute rates and to understand the need for capacity, as well as to appreciate all exposures. See Maximum foreseeable loss (MFL) and Probable Maximum Loss (PML).
APRA	Australian Prudential Regulation Authority.
Arbitration	A process to resolve disputes where both parties agree to be bound by the decisions of a selected party, known as an Arbitrator.
ASIC	Australian Securities and Investment Commission
Assessor	An individual or firm who is appointed to determine liability or assess loss in the event of a claim.
Assigned Risk	A programme normally legislated by government, which is designed to provide an insurance market for risks that are considered undesirable or otherwise uninsurable. The legislation requires all insurers in that particular state to participate in the Assigned Risk Plan, usually on a proportionate basis to the amount of conventional business they underwrite. (An example is the automobile insurance plans in the USA for drivers that cannot obtain it through conventional means – California Automobile Assigned Risk Plan and the Connecticut Automobile Insurance Assigned Risk Plan are two examples).
Attestation Clause	Clause in an insurance contract which confirm that the insurers have agreed to provide the coverage under certain conditions, evidenced by their signing or stamping of the document.
Average	Also known as co-insurance, a clause which allows an insurer to reduce the amount of an insurance claim, in proportion to the level of any under insurance.

TERMS	DESCRIPTION
Bailee	One who is charged with the temporary care and possession of the property of another. E.g.; a garage is bailee of a customer’s (bailor’s) car (the bailment) and a jeweller is a bailee of customers’ jewellery while in its possession for repair or appraisal.
Bailee’s Liability Coverage	Insurance covering damage caused by a bailee or employee to goods left in their care. A bailee’s legal responsibility is to exercise care appropriate to the circumstances of the bailment.
Bankers Blanket Bond	A form of insurance designed to protect financial institutions against loss from dishonest acts of employees, burglary, robbery, or theft both on the premises and in transit, forgery and counterfeiting, misplacement and a number of other perils particular to the finance sector.
Barratry	In Marine law relates to the wilful and illegal sinking, casting away, or damaging of a ship at sea or its cargo by the master or crew. In English law barratry relates to the practice of exciting and encouraging lawsuits and quarrels.
Basic Premium	The initial premium paid at the beginning of an adjustable insurance contract. Normally at the end of the policy period and/or agreed subsequent periods, the basic premium is adjusted retrospectively based on agreed factors such as claims experience, underwriting values etc.
Betterment	A term used to describe an advantage that an insured receives under an insurance policy, where the property being reinstated after a claim is left in a better or more valuable position than it was prior to the claim. Depending upon the policy conditions, the insurer may reduce the amount paid under the policy, or seek a contribution towards the cost of the reinstatement.
Bid Bond	A bond intended to guarantee that the bidder on a construction, supply or service contract will enter into the contract if successful in their bid. Should the bidder fail to enter the contract, the underwriter or guarantor of the bond (known as the surety) may be called upon to pay the difference between the amount of the principal’s bid and the bid of the next lowest qualified bidder.
Bill of Lading	A document issued by a carrier as receipt for goods being transported, which outlines the carrier’s liability, limitations and exemptions in respect of the goods.
Binder	An agreement between an insurer and an intermediary which gives the intermediary the authority to insure organisations on their behalf. In this capacity, the intermediary is acting on behalf of the insurer, not the insured.
Blanket Coverage	Insurance which covers more than one item of insured property or other interest without apportioning a specific sum insured against each insured item. A blanket policy is usually subject to a maximum limit in respect of any one loss and may contain certain restrictions absent in “specific” or “itemized” policies, such as the use of a coinsurance clause.
BLEVE	Boiling Liquid Expanding Vapour Explosion – the explosive release of expanding vapour and boiling liquid following the catastrophic failure of a pressure vessel holding a pressure liquefied gas such as propane or LPG. A BLEVE is the worst possible outcome when a propane or LPG tank is exposed to fire. BLEVE hazards include fireballs, blast, projectiles and possible toxic clouds or vapour cloud explosions.
Bond	Insurance bonds are normally three-party contracts in which one party (the surety) agrees to guarantee the act, performance, or behaviour of a second party (the principal), to a third party (the obligee).
Bordereau	A detailed summary of premium, underwriting and / or loss information on risks insured under an agreement with the insurer or reinsurer.
Broker	An insurance broker arranges insurance on behalf of a person or business with a range of insurers. The broker is independent of the insurers, and legally is seen to act on behalf of the insured not the insurer.
Bumbershoot	An English word for “umbrella” used in a context to indicate a broad marine umbrella liability insurance policy providing coverage for marine risks. Can include protection and indemnity, general average, collision, sue and labour as well as general liability exposures.
Burning Cost	A term used to express the pure cost of losses and/or the ratio of losses within a specific period against premiums paid in the same period.
Burning Layer	The first layer of coverage in property or casualty insurance which will experience the primary losses.

TERMS	DESCRIPTION
Capacity	The amount of capital available from an insurance company or the market, for underwriting insurance coverage.
Captive Insurer	A company owned and established primarily for an organisation to insure its own losses, and transfer catastrophe risks to reinsurers.
Caveat emptor	Latin term meaning let the buyer beware.
Catastrophe	A sudden violent and widespread disaster that impacts on many organisations and/or results in substantial loss.
Cede	To transfer to a reinsurer all or part of the insurance or reinsurance written by a ceding, or primary, insurer. Also means to purchase reinsurance.
Cedant	A ceding insurer or reinsurer.
Certificate of Insurance	Confirmation of coverage provided by the insurer or broker evidencing currency of the policy, and outlining the principal provisions of the insurance policy.
Cession	The component of insurance which is passed to a reinsurer by a primary insurer who has insured the original risks. A cession may be the entire amount or a portion of single risks, a specifically defined group of policies, or classes of business, as outlined in the reinsurance contract.
Civil Liability	Many professional indemnity policies provide indemnity for a negligent breach of the professional duty of the insured. It is often possible to negotiate broader coverage that does not require there to be a negligent breach.
Claims Made	Most professional liability coverages are arranged on what is known as a claims made wording. This means that the policy only responds to claims first made against your business during the policy period, irrespective of when the act of negligence was actually committed. Once the period of insurance has expired, no claims can be made on insurers unless they were notified at some time during the currency of the policy.
Claims Triangulation	A table which charts the movement of total incurred losses from the original policy period, over several subsequent periods. It is used to analyse the development pattern of losses over time and project the accuracy of early estimates and/or the likely total paid incurred based on any movement in value of the original estimates.
Clash Cover	Reinsurance covering an insurer’s exposure to a larger single loss than intended in the same loss occurrence. A clash cover provides payment when the unusual circumstances occur where two or more policies experience the same occurrence of loss and the total amount of the payment of losses for the multiple policies exceeds the clash cover retention amount. Sometimes referred to as Unknown Accumulation Cover or Contingency Cover.
Class Action	Legal action brought by a group of people or organisations with the same grievance or claim against a common defendant.
Co-insurance	1) A provision in an insurance policy allowing insurers to reduce the amount of any claim in proportion to an amount by which the insured has under insured (also known as the average); and / or 2) A process by which a number of insurers agree to participate in an insurance risk (as co-insurers).
Combined Ratio	A performance measurement for insurers which compares the sum of claims, commissions and expenses against the premiums written.
Combined Single Limit	An aggregate limit of liability coverage for bodily injury and property damage in one accident or occurrence.
Commercial General Liability (CGL)	Common name for a combined broadform public and products liability insurance policy.
Common Law	The law that has evolved over time as a result of previous court decisions, rather than by specific legislation introduced.
Completed Operations Liability	This arises out of faulty or defective work which was performed under a project which has subsequently been handed over to the principal.
Condition	A section of an insurance policy which stipulates certain undertakings, usually by the insured, for the policy to respond properly. These are usually related to the manner in which the insured must conduct themselves, particularly regarding the notification and handling of claims. An insurer may be able to refuse indemnity under the policy if a condition has not been complied with (subject to the provisions of the Insurance Contracts Act).
Conflagration	A very intense and uncontrolled fire extending to many properties, or over a large area.
Consequential Loss	A loss which is in addition to and in consequence of a claim under a policy, often an economic loss such as revenue or profits.
Consideration	A principal under English law, that for a contract to be valid, each party must provide something of value “in consideration” of the contractual agreement. In an insurance contract, the consideration provided by the insured is the premium, and the consideration made by the insurer is the promise to pay should a loss, accident or injury occur (usually of a magnitude many times more than the consideration paid by the insured).
Constructive Total Loss	An insurance claim which is settled for a full amount, on the basis that the cost to repair or recover the damaged property, would exceed the indemnity replacement cost or market value of the item.
Contingent Liability	A liability which arises independently from an insured as a result of negligence on the part of another person or organisation, but for which the insured may be held responsible. An example of contingent liability is that of a principal contractor, who may incur liability as a result of actions undertaken by subcontractors. See also Vicarious Liability.
Contractual Liability	Legal liability or responsibilities of another party that are assumed under a verbal or written contract.
Contribution	Where more than one insurer covers the same risk under different policies, the insurers are required under the Insurance Contracts Act to indemnify the insured and then determine who is responsible for which proportion of the loss.
Continuous Cover Clause	Under this clause, the insurer agrees that if you provide notice of a claim that should or could have been notified under a previous policy period, then the insurer will accept notification of the claim, provided that the same insurer has been covering you on a continuous basis since the date when the notification should have been made.
Contra preferentum	Latin term used to address ambiguity in construction of a contract. Under the Contra preferentum rule, any ambiguity in a contract will be construed against the party responsible for drafting the contract.
Contract of Adhesion	A contract drafted by one party and offered with little opportunity for the other party to bargain or alter the provisions. Contracts of adhesion generally contain detailed standard terms and conditions, written in legal or business language difficult for ordinary consumers to understand. Insurance policies can be considered contracts of adhesion because they are drafted by the insurer and offered without providing the insured with any opportunity to make significant alteration. As a result, courts generally rule in favour of an insured where there is an ambiguity in the insurance policy provisions.
Cross Liabilities Clause	A clause in liability contracts which obligates the insurers to treat each insured under a combined policy, as if they were a separate insured entity.
Cut Through Clause	a clause in a reinsurance contract which clarifies that, should the primary insurer becomes insolvent, the reinsurer is still liable for its stated share of the loss and that payment will be made directly to the insured, not to the insolvent insurer. Generally used when the financial security or rating of the insurer is insufficient to attract insured’s (or mortgagors) with strict minimum financial standards insurers.

TERMS	DESCRIPTION
Deductible	An amount which the insured agrees to accept as self insurance, and which is deducted from the total amount of loss payable in a claim.
Difference in Conditions (DIC)	Insurance which is arranged to provide supplementary coverage, over and above that which is insured by a nominated original or primary policy.
Duty of Disclosure	Under the Insurance Contracts Act an individual or business applying for insurance has an obligation to disclose to the insurer, every matter which they know, or should know, would effect the insurers decision on whether or not to accept the risk, and what premium to charge. If relevant matters are not disclosed, the insurer is given certain rights to decline a claim or cancel a policy.

TERMS	DESCRIPTION
Earned Premium	The portion of premium which applies to the period of time under the insurance contract which has already expired.
Endorsement	A clause added to an insurers policy wording which changes the coverage provided, and is considered to form part of the insurance contract.
Excess	The amount of a claim that is the insured’s responsibility to fund. The insurer pays all amounts over and above this amount.
Exclusion	A clause in the policy which describes events or circumstances for which the policy will not provide cover (i.e. cover is excluded).
Extended Reporting Period	An additional period of time provided after the expiry of a claims made policy, during which valid claims will continue to be accepted by insurers.

Glossary of Insurance Terms

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TERMS	DESCRIPTION
Facultative Reinsurance	A type of reinsurance under which the reinsurer has the option to accept or reject any risk presented to it by the insurer seeking reinsurance.
Floater	A policy that covers multiple construction projects or items of equipment at all times, subject to declarations and premium adjustments made at specified periods.
Franchise	A method of imposing a policy excess, where the insured is responsible to self insure losses up to an agreed amount. Where losses exceed this amount, any valid claim will be paid for the full amount of the loss.

TERMS	DESCRIPTION
General Average	A loss incurred in ocean marine cargo insurance, where a claim is shared by all parties to the voyage.

TERMS	DESCRIPTION
Hold Harmless	A clause contained in a contract under which one party agrees to release another party from all legal liability.

TERMS	DESCRIPTION
Increase in Cost of Working	See Additional Cost of Working.
Incurred But Not Reported (IBNR	An allowance or factor made for claims which are predicted to have occurred, but have not yet been reported.
Indemnity	The process or undertaking where the insurer provides financial compensation for loss insured under the policy. The principle of indemnity is based on the insured being returned to a position no better or no worse than they were in prior to the loss.
Insurance	A contract under which an insurer agrees to indemnify an insured under certain circumstances, after being paid a premium to do so.
Intermediary	A person or organisation that arranges insurance on behalf of an insured. The intermediary can be either an agent or broker.
Insured	The individual or organisation which is the beneficiary of the indemnity provided by an insurer under the insurance contract.
Insurer	The organisation which agrees to provide indemnity under an insurance contract.
ISR	An industrial special risks insurance coverage.

TERMS	DESCRIPTION
Lapse	The termination or discontinuance of any insurance policy, generally through non payment of premium, or absence of instructions to renew.
Layer of Insurance	Where a significant amount of insurance cover is required, it may be necessary to arrange insurance with more than one insurer. The first insurer provides a “primary layer” of coverage. The next insurer’s policy is an “excess layer”. This policy only provides indemnity in the event that a loss exceeds a specific amount (the level of cover provided under the primary layer).
Limit of Indemnity	The maximum amount that an insurer will provide indemnity for in respect of any one claim, and /or in any one policy year.
Loss Adjuster	An individual or firm who is appointed to determine liability or assess loss in the event of a claim.
Loss Control	Actions taken by an organisation to reduce or mitigate the potential for future losses.
Loss Ratio	A measurement for calculating profitability, by dividing the amount of claims into the amount of premiums paid.

TERMS	DESCRIPTION
Material Fact	A matter or fact that is known by the insured, and should be advised to the insurer to enable it to decide whether to accept an insurance risk and /or an appropriate premium to charge.
Maximum Foreseeable Loss (MFL)	The maximum amount of any foreseeable loss. Generally applicable when a client has a spread of assets in varying locations and the underwriters need to establish exposure.
Misrepresentation	If an insured does not comply with its duty of disclosure and does not disclose all material facts, then the insurer is given certain rights under the Insurance Contracts Act to deny claims or cancel the policy.
Moral Hazard	Perceived hazard arising from any non physical, personal characteristic of a risk that increases the likelihood or magnitude of a loss.

TERMS	DESCRIPTION
Named Perils	Specific events which are insured under a policy.
Non Admitted Insurer	An insurer who is not licensed or authorised to carry out insurance in a particular country or state.

TERMS	DESCRIPTION
Operating Ratio	A performance measurement for insurers which shows the sum of expenses and losses expressed as a percentage of premium.

TERMS	DESCRIPTION
Peril	The cause of a loss insured against in a policy.
Policy Schedule	The policy schedule issued each year by the insurer setting out the information regarding who / what is covered, the period of insurance, the level of cover etc. This attaches to and forms part of the insurance contract.
Primary Insurance	Insurance that must indemnify the insured before any other coverage that the insured may have in place.
Probable Maximum Loss	The potential maximum amount payable to any one claim or any one situation.
Proximate Cause	The dominating or primary cause of loss or damage; an unbroken chain of events between the occurrence and the damage.
Punitive Damages	Court awarded amounts exceeding economic losses suffered by the third party that are intended solely to punish the defendant.

TERMS	DESCRIPTION
Rate	The pricing factor upon which a premium is based.
Reinsurance	An arrangement between an insurer and a reinsurer to “reinsure” all or parts of the original insurance policy taken out with the insured.
Renewal	Most policies are arranged for a fixed period, normally 12 months. The insurer may offer to “renew” the insurance policy for a further period, subject to a new premium and / or other policy conditions.
Reserve	The amount predicted and / or set aside by insurers to pay outstanding claim commitments under insurance policies issued by them.
Retroactive Date	The indemnity provided under professional indemnity policies may include retroactive cover for activities undertaken before the policy was taken out. This will rarely be unlimited, and will be subject to a specific date, known as the retroactive date. Retroactive cover will exclude circumstances that are known prior to inception of the policy.
Retrocession	The process by which a reinsurer obtains reinsurance from another company.
Run-off	Once a claims made policy expires, the insurer is not liable to provide indemnity for circumstances that have not been advised to them before expiry. A retiring partner, or business which has been sold, will need to ensure that cover is kept in force for a reasonable period of time to cover the “run-off” of potential incidents which have happened but are yet to be reported as claims.

TERMS	DESCRIPTION
Salvage	Property recovered by the insurer after they have made a settlement under a policy.
Self Insured Retention	The amount of risk which an organisation assumes responsibility to self insure.
Slip	A document used to summarise the terms and conditions under which a contract of insurance or reinsurance has been entered into.
Subrogation	When an insurer has provided indemnity under the policy, they are entitled to assume the rights of the insured (s) to pursue recovery against a negligent third party, to try and mitigate their losses.

TERMS	DESCRIPTION
Tort	A civil wrong, other than breach of contract.
Total Cost of Risk	A measurement of an organisation’s complete costs beyond just the premiums paid to insurers. Calculation methods vary, but generally include insurance premiums, service provider fees, cost of losses which are self insured or below policy deductibles, cost of loss prevention and reduction measures, administrative cost of operating the insurance and risk management program, plus any other consequential costs.
Treaty	An arrangement between a reinsurer and an insurer setting out the details of their reinsurance commitments.
Triangulation	See claims triangulation

TERMS	DESCRIPTION
Umbrella Liability	An insurance policy which provides coverage in excess of various primary liability policies, as well as supplementary difference in conditions coverage where the primary policy is not as broad.
Unearned Premium	The portion of premium that an insurer had collected, but has yet to earn, because the policy still has time until it expires.
Underwriter	The individual employed by the insurer to assess or “underwrite” the risks of insurance to be covered under the policy. The term dates back to the origins of Lloyd’s of London, where investors or merchants agreeing to accept part of an insurance risk, would write their names underneath the original investor who had set the terms of the contract.
Utmost Good Faith	(Uberrimae Fidei) This is a basic principal of insurance which implies that both parties to an insurance contract have an obligation to act in good faith in their dealings with each other.

TERMS	DESCRIPTION
Vicarious Liability	When a person or organisation is held liable for the negligent actions of another person or organisation, even though they were not directly responsible for the damage or injury caused. For example an employer can sometimes be held vicariously liable for the acts of a worker or contractor. See also Contingent Liability.

TERMS	DESCRIPTION
Warranty	A guarantee or assurance by the insured or insurer.
Worker to Worker Liability	A liability exposure arising primarily on construction sites, where a contractors’ employee sues the principal in an effort to obtain a common law award, which is not available under direct workers compensation claims against the contractor.