General Insurance (Motor)
Browse this insurance glossary India for simple definitions of key insurance terms used across different general policy types.
A
Accident Insurance:
Insurance that provides financial protection against injuries, disability, or death caused by an accident.
Accidental Bodily Injury:
Physical injury caused directly by an accident.
Accidental Death Benefit:
An additional payout provided by a life insurance policy if the insured dies due to an accident.
Actual Cash Value:
The value of damaged property after accounting for depreciation.
Actual Total Loss:
A situation where the insured property is completely destroyed or lost.
Actuary:
A professional who assesses risk and helps insurers calculate premiums and future liabilities.
Additional Insured:
A person added to an insurance policy and provided with certain coverage benefits.
Adverse Selection:
The tendency of higher-risk individuals to seek more insurance coverage than lower-risk individuals
Aggregate Limit:
The maximum amount an insurer will pay for all claims during a policy period.
All-Risks Policy:
A policy that covers losses from most risks unless specifically excluded.
Arbitration:
A method of resolving disputes through an independent third party instead of going to court
Arson:
The deliberate act of setting fire to property.
Assurance:
Insurance that covers an event that is certain to happen, such as death.
Assured:
The person whose life, property, or interest is covered under an insurance policy.
Average Clause:
A policy condition that reduces claim payments when the insured property is underinsured.
B
Bancassurance:
The distribution of insurance products through banks.
Blanket Insurance:
Insurance that provides a single coverage limit for multiple properties, items, or locations.
Bonus-Malus:
A system that adjusts premiums based on a policyholder’s claim history.
Burglary:
The unlawful entry into a property with the intent to commit theft.
C
Captive Insurance Company:
An insurance company created primarily to provide coverage for its parent company or related businesses.
Catastrophe Risk:
The risk of a large-scale loss caused by events such as floods, earthquakes, or storms.
Catastrophe:
A single event that causes unusually large insurance losses.
Certificate of Insurance:
A document that serves as proof of insurance coverage.
Certificate of Motor Insurance:
A document that confirms a valid motor insurance policy is in force.
Claims-Made Policy:
A policy that covers claims reported during the policy period, subject to policy terms.
Co-Insurance:
A method of sharing insurance risk among multiple insurers under a single policy.
Commercial Umbrella:
Liability insurance that provides additional coverage above the limits of underlying policies.
Commission:
The payment made by an insurer to an agent or broker for selling and servicing a policy.
Composite Insurer:
An insurance company that offers both life and general insurance products.
Comprehensive Coverage:
Insurance that covers damage to a vehicle from events other than collisions, such as theft, fire, or natural disasters.
Concealment:
The deliberate withholding of important information from an insurer.
Conditions:
The terms and requirements that both the insurer and policyholder must follow under a policy.
Consequential Loss:
The deliberate withholding of important information from an insurer.
Consideration:
Something of value exchanged between parties to make a contract legally binding.
Contract:
A legally binding agreement between two or more parties.
Contribution:
The sharing of a claim payment between multiple insurers covering the same risk.
Contributory Negligence:
A situation where the insured’s own actions contribute to the loss or damage.
Cover Note:
A temporary document that provides proof of insurance until the final policy is issued.
D
Debris Removal Clause:
A policy provision that covers the cost of removing debris after an insured loss.
Disability Income Insurance:
Insurance that provides regular income if the insured becomes unable to work due to illness or injury.
Double Insurance:
A situation where the same risk is covered by more than one insurance policy.
Duty of Disclosure:
The obligation to provide all important information when applying for insurance.
E
Employment Practices Liability Coverage:
Insurance that protects employers against claims such as wrongful termination, discrimination, or harassment.
Endorsement:
A written change or addition that modifies the terms of an insurance policy.
Estimated Maximum Loss (EML):
An estimate of the largest loss that could occur from a single insured event.
Excess:
The portion of a loss that the policyholder must bear before the insurer pays.
Ex Gratia Payment:
A payment made by an insurer without admitting legal liability.
F
Fiduciary:
A person entrusted to act in the best interests of another person or organisation.
Fire:
A combustion event that escapes its intended boundaries and causes damage.
First Loss Insurance:
Insurance that covers losses up to a specified amount, even if the property’s full value is higher
Fortuitous Loss:
A loss that occurs unexpectedly and by chance.
Franchise:
A threshold below which an insurer does not pay a claim, but above which the full claim may be paid.
Fronting:
An arrangement where one insurer issues a policy and transfers most or all of the risk to another insurer
G
Glass Insurance:
Insurance that covers loss of or damage to glass and related fixtures.
Gross Negligence:
A serious failure to exercise reasonable care, showing reckless disregard for consequences.
Group Insurance:
Insurance that covers a group of people under a single policy, usually through an employer or association.
H
Hazard:
A condition or circumstance that increases the likelihood of a loss.
I
Identity Theft Insurance:
Insurance that covers certain expenses incurred as a result of identity theft.
Indemnification:
Compensation provided for a loss through payment, repair, or replacement.
Indemnity:
The principle of restoring an insured person to their financial position before a loss, without allowing a profit from the claim.
Insurable Interest:
A financial or legal interest in the subject matter being insured.
Insurable Risk:
A risk that meets the requirements for insurance coverage.
Intangible Assets:
Non-physical assets such as goodwill, reputation, trademarks, or intellectual property.
J
Joint-and-Several Liability:
A legal principle that allows a claimant to recover the full amount of damages from any responsible party.
L
Lapsed Policy:
An insurance policy that has ended because the premium was not paid.
Larceny:
The unlawful taking of another person’s property.
Law of Large Numbers:
The principle that insurance predictions become more accurate as the number of insured risks increases
Liability:
A legal responsibility or obligation to another person or organisation.
Liability Insurance:
Insurance that covers legal liabilities arising from injury, damage, or loss caused to others.
Lien:
A legal right over property until a debt or obligation is paid.
Loading:
The amount added to the basic premium to cover expenses, profit, and risk factors.
Long-Term Care Insurance
Insurance that covers the cost of long-term care services, such as nursing or assisted living care.
Loss:
An event that results in damage, injury, or financial harm covered by insurance.
Loss Avoidance:
Actions taken to eliminate exposure to a particular risk.
Loss Control:
Measures taken to reduce the likelihood or severity of losses.
Loss Exposure:
The possibility of suffering a loss due to a specific risk.
Loss Payable Clause:
A policy provision directing claim payments to a specified third party with an interest in the insured property.
Loss Prevention:
Actions taken to reduce the chance of a loss occurring.
Loss Ratio:
The ratio of claims paid to premiums earned, expressed as a percentage.
Loss Reserve:
Funds set aside by an insurer to pay future claims.
Loss-of-Profits Insurance
Insurance that covers lost profits and certain ongoing expenses following an insured event.
M
Malpractice Insurance:
Insurance that protects professionals against claims of negligence or mistakes in their work.
Minor:
A person who is below the legal age to enter into certain contracts.
Misrepresentation:
Providing false, inaccurate, or incomplete information when applying for insurance.
Moral Hazard:
The risk that a person may act dishonestly or take greater risks because they have insurance coverage
Mutual Insurance Company:
An insurance company owned by its policyholders.
N
Negligence:
Failure to exercise reasonable care, resulting in damage, injury, or loss
O
Occupational Hazard:
A risk arising from the nature of a person’s job or work environment.
Occurrence:
An event or incident that causes injury, damage, or loss during the policy period.
P
Package Policy:
A single policy that combines multiple types of insurance coverage.
Peril:
A risk, event or cause of loss that may be covered by an insurance policy.
Peril of Nature:
A natural event, such as an earthquake, flood, or storm, that can cause loss or damage.
Personal Lines:
Insurance products designed for individuals and families rather than businesses.
Physical Damage:
Damage to property or a vehicle caused by a covered event.
Probate:
The legal process of validating a will and distributing a deceased person’s assets.
Proof of Loss:
Documents or evidence submitted to support an insurance claim.
Proposal:
The amount paid to an insurer in exchange for insurance coverage.
Proposer:
The person or organisation applying for insurance coverage.
Proximate Cause
The primary or most direct cause of a loss.
Pure Risk:
A risk that can result only in a loss or no loss, with no possibility of gain.
R
Rate:
The cost of insurance for a specific unit of risk.
Reinstatement:
The restoration of a policy that has lapsed or been suspended.
Replacement:
The substitution of one insurance policy with another.
Risk:
The possibility of a loss or adverse event occurring.
Risk Avoidance:
Actions taken to completely eliminate exposure to a particular risk.
Risk Control:
Measures taken to reduce the likelihood or impact of a loss.
Risk Reduction:
Steps taken to lower the chance or severity of a loss.
Risk Retention:
The practice of accepting and bearing a risk rather than transferring it through insurance
Robbery:
The taking of property through force, violence, or threat
S
Salvage:
Property recovered after a loss, or the act of recovering property from a loss situation.
Soft Market:
A market condition where insurance is widely available and premiums are generally lower.
Spread of Risk:
The practice of distributing risk across many policyholders to reduce the impact of individual losses.
Stop-Loss:
Insurance or reinsurance that provides coverage once losses exceed a specified limit.
Subrogation:
The insurer’s right to recover claim amounts from a third party responsible for the loss.
Surcharge:
An additional charge added to the premium due to increased risk.
Surplus:
The amount by which assets exceed liabilities, or the portion of risk exceeding an insurer’s retention
Surveyor:
A professional who assesses and reports on the condition, value, or extent of damage to property.
T
Tail Coverage:
An extension that allows claims to be reported after a claims-made policy has ended
Tariff:
A standardised schedule used to determine insurance premiums for specific risks.
Theory of Probability:
A mathematical principle used to estimate the likelihood of future losses.
Third Party:
A person or entity that is not a party to an insurance contract but may be affected by it.
Third-Party Liability:
Legal responsibility for injury, damage, or loss caused to another person or their property.
Total Loss:
A situation where insured property is completely destroyed, lost, or damaged beyond repair.
U
Umbrella Policy:
Insurance that provides additional liability coverage beyond the limits of underlying policies.
Underinsurance:
A situation where the insurance coverage is insufficient to cover the full value of a loss.
Underwriting:
The process of evaluating risk and deciding the terms and premium for insurance coverage.
Undischarged Insolvent:
A person who has been declared insolvent and has not yet settled their debts or completed the legal process.
Unvalued Policy:
A policy where the value of the insured property is not agreed upon in advance and must be proven at the time of a claim.
Utmost Good Faith:
The principle that both the insurer and the insured must disclose all material information honestly and completely.
V
Valued Policy:
A policy where the value of the insured property is agreed upon in advance.
Vicarious Liability:
Legal responsibility for the actions or omissions of another person
Void Contract:
A contract that is not legally valid or enforceable.
W
War Hazard Exclusion:
A policy provision that excludes losses caused by war or hostile actions.
Warranty:
A promise or condition in an insurance policy that must be complied with by the insured.
Wear and Tear:
The gradual deterioration of an item due to normal use over time.