Glossary of Insurance TermsPlease note that the brief explanation given of each terms or phase in this glossary is not necessarily exhaustive and is intended to convey the general meaning rather than to prove precise definition. For further information on any entry please contact us. Average (Non Marine): Unless specific alternatives are arranged, other than Stock which Indemnity, you must insure for the full new replacement value under each heading. If you are under-insured, Insurers will only pay the proportion insured on any claim. Average (Marine): Sharing of costs involved in saving a vessel, even if your own goods are not damaged. Conditions: If you do not comply with conditions laid down then insurers may refuse to pay a claim if the condition was relevant Day One: The value fixed at the first day of the insurance period on which the sum insured is based. Declaration basis: When applied to a consequential loss policy gives 33.33% uplift on the estimated gross profit figure. The policy is not subject to average. Deductible: The first part of any claim to be paid by you. Excess: The first part of any claim paid by you. First Loss Insurance: Used particularly where there may be high values at risk, but you do not wish to insure for the full amount. Average may still be applied if the total value at risk is not accurately declared. Franchise: The limit below which insurers will not consider a claim. Above this, the claim would be met in full. Sometimes this could be a period of time or a financial sum. Indemnity: The amount paid to return you to the pre-loss sate, i.e. you must not profit from a claim. Also, certain items may be insured on a indemnity basis taking account of age, wear and tear etc, if they are obsolete or readily available in the second-hand market. Indemnity Period: The post-loss period during which your business may still be suffering the effects of a loss and Insurers may make payments under a Business Interruption Policy. Limit of Indemnity: The maximum payable in respect of any one claim, series of claims or period of insurance as appropriate under liability policies and certain other types of insurance. Long Term Agreement: Agreement with insurers to continue cover with them for a specified time.(usually three or five years) provided renewal is offered on a unaltered basis. Reinstatement: Usually exact (or nearest equivalent) replacement. Subrogation: Assignment of rights to insurers to allow them to pursue claims on your behalf Sums Insured: The value of which buildings or various categories of machinery, contents or stock etc are insured. Warranty: A specific requirement under a policy to do something to protect property, e.g. waste warranty etc. Failure to meet the warranties on a policy could result in a claim being rejected.
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