Coverage & Policy Glossary

The replacement cost of damaged or stolen property minus depreciation at the time of the loss.

The transfer of rights or interest in an insurance policy from the policyholder to another party, subject to the insurer's consent.

The maximum total amount an insurer will pay for all covered losses during a single policy period, regardless of the number of individual claims.

An insurance policy that covers all causes of loss except those specifically excluded in the policy wording, providing broader coverage than a named-perils policy.

A policy arrangement where the insurer and insured agree on the value of the insured property at the time the policy is taken out, eliminating disputes about value at the time of a claim.

A policy provision that reduces the claim payout proportionally if the property is insured for less than its full value (under-insured), penalizing the policyholder for inadequate coverage.

Optional supplementary coverage that can be purchased in addition to a base insurance policy for an extra premium, extending protection to risks not included in the standard policy.

An improvement to the insured property beyond its pre-loss condition, for which the policyholder may need to pay the additional cost since insurance covers restoration, not improvement.

A single coverage amount that applies across multiple items, locations, or categories of property rather than assigning separate limits to each.

The method used to calculate the claim payout, such as replacement cost, actual cash value, indemnity value, or market value, as specified in the insurance policy.

An arrangement where the policyholder shares a percentage of covered costs with the insurer after the deductible is met, or where multiple insurers share risk on a single policy.

A requirement or condition that must be fulfilled by the policyholder before the insurer is obligated to pay a claim under the policy.

The principle that when two or more policies cover the same loss, each insurer pays a proportionate share of the claim so the insured does not profit from the loss.

The termination of an insurance policy before its natural expiry date, initiated by either the policyholder or the insurer.

Financial losses that arise as an indirect result of an insured event, such as lost revenue or additional expenses incurred because of property damage, typically requiring separate coverage.

A document issued by an insurer or broker that serves as proof that an insurance policy exists, summarizing key coverage details without containing the full policy wording.

A fixed excess amount set by the insurer that the policyholder must pay toward any claim, which cannot be removed or reduced.

The decrease in value of property over time due to age, wear and tear, or obsolescence.

The amount the policyholder must pay out of pocket before the insurance company begins to cover a claim.

A type of insurance policy where the insured periodically declares the value of goods or stock held, and the premium is adjusted based on the average value during the policy period.

The portion of a claim that the insured must bear before the insurer pays. Commonly used in India and UK markets as equivalent to the US term deductible.

A written amendment or addition to an existing insurance policy that changes the terms, coverage, or conditions of the original contract.

A specific condition, circumstance, or type of loss that is not covered by an insurance policy, clearly stated in the policy document.

A payment made by an insurer as a goodwill gesture even though the claim may not be strictly covered under the policy terms, without admitting legal liability.

The date on which an insurance policy ceases to provide coverage, after which the policyholder must renew or purchase a new policy to maintain protection.

An insurance policy that covers property that moves between locations, such as goods in transit, construction equipment, or mobile assets, providing coverage regardless of where the property is situated.

An insurance policy where the sum insured covers only a portion of the total value at risk, with the insurer paying the full claim up to the sum insured without applying the average clause.

An additional period after the premium due date during which the policyholder can make payment without the policy lapsing, typically 15 to 30 days depending on the insurer.

The principle that insurance should restore the policyholder to the same financial position they were in before the loss, no better and no worse.

A legal or financial relationship between the policyholder and the insured property or person, where the policyholder would suffer a financial loss if the insured event occurs.

The date on which an insurance policy comes into effect and coverage begins, marking the start of the policy period.

The automatic termination of an insurance policy due to non-payment of the premium by the due date, resulting in loss of coverage.

Any information that would influence a reasonable insurer in deciding whether to accept a risk and at what premium, which must be disclosed during the insurance application.

The act of providing false or misleading information to an insurer about material facts, whether intentional or innocent, which can void the insurance contract.

A condition in business interruption policies requiring that a valid material damage claim exists under a property policy before the business interruption claim can be paid.

The failure of the policyholder to reveal material facts to the insurer when applying for or renewing insurance, which can void the policy.

The process by which a policyholder designates a person to receive the policy benefits in case of the policyholder's death, commonly used in life insurance.

An insurance policy that only covers losses caused by specific perils listed in the policy, such as fire, lightning, explosion, or windstorm.

A standing insurance arrangement, primarily used in marine insurance, that automatically covers all shipments made by the insured during the policy period without needing individual declarations for each.

A situation where the sum insured exceeds the actual value of the insured property. Due to the principle of indemnity, the insured cannot profit and will only receive the actual loss amount.

The amount of money a policyholder pays to an insurance company in exchange for coverage, typically paid monthly, quarterly, or annually.

The dominant, active, or most effective cause of a loss that sets the chain of events in motion, used to determine whether a loss is covered under a policy.

The duration of time during which an insurance policy is in effect, typically one year, specifying the start and end dates of coverage.

The maximum amount an insurer will pay for a single covered event or occurrence, separate from the overall aggregate limit of the policy.

The section of an insurance policy that contains the specific details unique to that policy, including the policyholder name, insured property, sum insured, premium, deductibles, and policy period.

A standardized application form filled out by a person or business seeking insurance, containing questions about the risk to be insured that the underwriter uses to evaluate and price the policy.

The cost to replace damaged property with new property of similar kind and quality, without deducting for depreciation.

An additional provision attached to an insurance policy that extends or modifies the coverage provided by the base policy, typically for an additional premium.

The process of continuing an insurance policy for another term by paying the renewal premium before the existing policy expires.

The restoration of a lapsed insurance policy back to active status, usually requiring payment of overdue premiums and sometimes a reinstatement fee or fresh underwriting.

The maximum amount an insurance company will pay for a covered loss under a policy, representing the total value of the insured property or interest.

The right of an insurer, after paying a claim, to step into the shoes of the policyholder and pursue recovery from the third party responsible for the loss.

A cap within an insurance policy that limits coverage for a specific type of loss or category of property to an amount lower than the overall policy limit.

The legal principle requiring both the insurer and the insured to act honestly and disclose all material facts relevant to the insurance contract.

An insurance policy that does not specify the value of the insured property at inception. The value is determined at the time of loss based on actual evidence and assessment.

A situation where the sum insured on a policy is less than the actual value of the insured property, which can result in reduced claim payouts under the average clause.

An insurance policy where the insured value is agreed upon at the time the policy is issued, and that agreed amount is paid in the event of a total loss regardless of the actual value at the time of loss.

An additional excess amount that the policyholder chooses to bear on top of the compulsory excess, typically in exchange for a lower premium.

A condition in an insurance contract that the policyholder must strictly comply with. Breach of warranty can void the policy regardless of whether the breach caused the loss.

A specified period after the inception of an insurance policy or the occurrence of a loss during which the insurer will not pay claims, used to prevent adverse selection and reduce moral hazard.