Act of God

An event that directly and exclusively results from the occurrence of natural causes that could not have been prevented by the exercise of foresight or caution; a natural catastrophe such as an: earthquake, volcanic eruptions, tsunamis, tornados and a storm / rainstorm.

All risks

Property insurance covering loss arising from any fortuitous cause (happening by chance rather than intention) except those that are specifically excluded.

Arbitration

The referral of a dispute to an impartial third party chosen by the parties in the dispute who agree in advance to abide by the arbitrator's award issued after a hearing at which both parties have a chance to be heard.

Arbitration clause

Language providing a means of resolving differences between a reinsurer and the reinsured (or an insurer and an insured) without litigation. Usually, each party appoints an arbiter. The two arbiters select a third, or an umpire, and a majority decision of the three becomes binding on the parties in the arbitration proceedings.

Broker

An insurance intermediary who / that represents the insured rather than the insurer.

Cancellation

The termination of an insurance policy or bond, before its expiration, by either the insured or the insurer. Insurance policy cancellation provisions require insurers to notify the insured in advance of cancelling a policy and stipulate the manner in which any unearned premium will be returned.

Claim number

The unique identifying number allocated to the insured upon submitting a claim; used for reference purposes.

Consequential loss

A financial loss that arises as a result of direct damage to property—for example, loss of rent. Some types of consequential loss are insurable under standard direct damage or time element coverage forms; others are not.

Damages

A subjective monetary award that is designed to compensate a third party for his or her loss, damage or injury.

Depreciation

The decrease in the value of property over a period of time, usually as result of age, wear and tear from use, or economic devaluation.

Excess

An excess is the first amount payable by you in the event of a loss, and is the uninsured portion of your loss, so when you submit a claim you’ll have to pay an excess. It usually has to be paid to the garage fixing your car once it is repaired before you can drive it away.

When you have to pay an excess for damages arising from an accident, it is irrelevant who was to blame for the accident, this serves to deter customers from submitting minor claims and/or fraudulent claims, and keeping premiums down.

Exclusion

Provision of an insurance policy or bond referring to hazards, perils, circumstances, or property not covered by the policy. Exclusions are usually contained in the coverage form or causes of loss form used to construct the insurance policy.

Ex gratia

Latin: "by favour" A payment made by underwriters “as a favour” or “out of kindness” without an admission of liability so as to maintain goodwill.

Indemnity

The principle according to which a person who has suffered a loss is restored (so far as possible) to the same financial position that he was in immediately prior to the loss, subject in the case of insurance to any contractual limitation as to the amount payable (the loss may be greater than the policy limit).

Intermediary

See ‘Broker’.

Knock-for-knock agreement

An agreement between insurance companies by which each pays its own policyholders regardless of liability.

Material fact

This refers to any fact which would influence the judgment of a prudent underwriter in deciding whether to accept an insurance/reinsurance risk and the terms on which he would be willing to grant cover. See duty of disclosure.

Negligence

A wrongful act or an infringement of a right (other than under contract) leading to legal liability and involving failure to use a degree of care considered reasonable under a given set of circumstances. Acts of either omission or commission, or both, may constitute negligence. Liability policies are designed to cover claims of negligence.

New for old settlement

Policies issued on the principle that claims will be based on the cost of replacing stolen, damaged, destroyed, or lost items with brand new items.

Non-disclosure

The holding back of known material information upon entering a policy

RAF – 'Road Accident Fund'

A state insurer that provides compulsory cover to all users of South African roads, citizens and foreigners, against injuries sustained or death arising from accidents involving motor vehicles within the borders of South Africa. This cover is in the form of indemnity insurance to persons who cause the accident, as well as personal injury and death insurance to victims of motor vehicle accidents and their families.

Recovery

Is the right for an insurer to pursue a third party that caused an insurance loss to the insured. This is done as a means of recovering the amount of the claim paid to the insured for the loss.

Risk

This term may variously refer to - (a) the possibility of some event occurring which causes injury or loss; (b) the subject-matter of an insurance or reinsurance contract; or (c) an insured peril.

Sum insured

The maximum amount that an insurer will pay under a contract of insurance. The expression is usually used in the context of property and life insurance where (subject to the premium cost) the insured determines the amount of cover to be purchased.

Third Party

Someone other than the insured or his insurer who has suffered injury or loss.

Underwriter

Depending on the context this term may refer to: (a) the individual who is responsible for underwriting a particular insurance or reinsurance contract and who is either an employee of a managing agent, an insurance company or reinsurance company or an employee of a cover holder or any similar underwriting agent. (b) An individual member or company that insures or reinsures a risk.