Abandonment

(a) The unconditional relinquishing by the insured of his interest in the subject-matter of insurance to the insurer following a total loss claim.

(b) Cover provided as part of an exhibition or conference insurance (usually linked to cancellation) for irrevocable loss incurred by the organiser or exhibitor.

ABI

Association of British Insurers
The ABI is a trade association of British Insurance Companies. It has more than 400 members, who provide over 97% of the insurance business in the UK.

Ab initio

From the beginning. If an insurance contract is fundamentally flawed or there is a breach of a condition precedent to the contract it is said to be void ab initio.

ABTA bond

A guarantee providing financial safeguards to travellers against losses they may suffer through default or financial failure of a travel agent who is a member of the Association of British Travel Agents.

Accident

A mishap or disadvantageous event that is unexpected.

Accident report form

The preferred term for the document used for motor insurance claims notification. It is a more accurate term than claim form because of the requirement placed on the insured to report every incident that could give rise to a claim under the policy, regardless of the insured's intention to claim on the policy.

Accident, sickness and unemployment insurance (ASU)

An annually renewable insurance designed to pay an income to the insured person for a fixed period (usually not exceeding two years) in the event of accident, sickness or unemployment as defined.

Act of God

An event that could not reasonably have been anticipated and that arises solely from natural causes with no human intervention.

Actual total loss

In relation to the subject-matter of insurance:
(a) Its complete physical destruction.
(b) Damage that renders it unrecognisable as the thing insured.
(c) The insured's permanent deprivation of it.

Additional Expenditure

Same as Increase in cost of working.

Additional increase in Cost of Working

An optional extension of cover provided under a business interruption policy that is designed to allow the insured to incur reasonable additional expenditure to avoid or diminish any reduction in turnover following a loss even if the sum payable exceeds the amount of the loss thereby avoided. See also Increase in cost of working.

Adjustable premium

A premium determined by a measure of exposure that is not capable of exact quantification until expiry of the period of insurance. It is usual for a provisional premium to be paid in advance, based on the estimated exposure.

Adjuster

See Average adjuster, Loss adjuster.

Administration bond

A financial guarantee given by an insurer against defaults of an individual or individuals administering the estate of another who died intestate or without an executor.

Admitted insurer

An insurer licensed to carry on insurance business in a particular territory.

Advance payment bond

A guarantee of funds in the event that a principal or contractor defaults once an advance payment has been made by an employer for the purpose of obtaining raw materials in order to carry out work under the terms of a contract.

Advance profits insurance

Business interruption insurance specially worded to cater for new or future business activities of the insured. It is needed in circumstances where there is no relevant previous trading period for sum insured assessment or claims settlement purposes.

Aggravated burglary

The crime of entering a building as a trespasser intending to steal or inflict grievous bodily harm by a person who at the time has with him any firearm or imitation firearm, any weapon of offence or any explosive (Theft Act 1968).

Aggregate deductible

In insurance for very substantial clients, the total of losses for which an insured is liable before the insurer becomes liable to pay.

Agreed value policy

A policy under which the insurer agrees with the insured in advance the measure of indemnity in the event of total loss or destruction of the subject-matter of insurance. Such policies are commonly found in marine cargo insurance (usually termed a valued policy) and in general insurance for unique or old items, such as classic cars and jewellery.

Aircraft

An additional peril available under a material damage or business interruption policy, which covers damage to insured property from aircraft and aerial devices, and articles dropped from them. There is invariably a general policy exclusion relating to damage caused by sonic bangs.

All risks

A term used to describe an insurance covering fortuitous loss of or damage to property subject to specific exclusions, such as those relating to depreciation, cleaning and repair processes and gradually operating causes.

Alternative risk transfer

A means of transferring risk using financial instruments. The scope of risks may embrace traditionally uninsurable areas.

Alternative trading clause

A provision in a business interruption policy that seeks to ensure that income generated from work done elsewhere for the benefit of the business is taken into account in any loss settlement.

Arbitration clause

A condition found in most general insurance policies that commits the insured and insurer to use arbitration as a means of settling a dispute when this relates to quantum, liability being otherwise admitted. It is also usually found in reinsurance contracts.

Arson

The criminal act of setting fire to property deliberately.

ATA carnet

A customs document providing a guarantee that local duty will be paid on exported goods if they are not returned to the UK, often used in connection with exhibition displays abroad. See also Carnet de passage bond.

ATOL bond

A guarantee that gives protection against the financial collapse of an air travel provider.

Auctioneer bond

A guarantee provided to an official receiver for the actions of an auctioneer in circumstances where the auctioneer is disposing of the property of a person who is insolvent.

Automatic fire detection system

A system for uninterrupted monitoring of rooms or spaces to detect the presence of smoke, heat or light generated by flames.

Automatic reinstatement

A provision in a general insurance policy that provides for the sum insured not to be reduced by the amount of any claim payment made. Such provisions are common in household insurances.

Average

(a) In marine insurance, physical loss or damage caused by a marine peril; see also General average.

(b) In general insurance, property insurances policies that are subject to average contain a policy condition designed to deal with the situation where the sum insured, on which the premium is based, is less than the full value of the insured property. The insured is considered to be the insurer for the difference between the sum insured and the full value, and must bear a proportion of each loss accordingly. See also Day one cover, Reinstatement memorandum, Special condition of average, Two conditions of average.

Average condition

The policy condition used for property that is subject to average; also known as the pro rata condition of average. See Average, Underinsurance.

Aviation insurance

A class of business that embraces cover for aircraft hulls, liabilities and airport liability risks (but not air cargo, since this is dealt with in the marine insurance market).

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