Insurance Definitions

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SALVAGE:  (1) Property taken over by an insurance company to reduce its loss; (2) Award recoverable by salvors under maritime law.

SALVAGE CHARGES:   The award due to a salvor for services rendered in saving the insured property.

SALVAGE LOSS:   Occurs when the Underwriter agrees to settle a cargo claim by paying the difference between the insured value and the proceeds realized by selling the damaged goods.

SCHEDULE:  (1) A list of specified amounts payable for, usually, surgical procedures, dismemberments, ancillary expenses or the like in Health Insurance policies; (2) The list of individual items covered under one policy as the various buildings or animals and other property in property insurance; (3) In Marine policies, a list attached to a slip, open cover, policy or other document, usually detailing the rates of premium for various voyages, interests and risks.

SCHEDULE OF LOSS:  Notice completed by the insured documenting loss or damage to contents, personal property and/or stock.

SEAWORTHINESS WARRANTY:   There is an implied warranty in every voyage policy that the ship must be seaworthy at the commencement of the insured voyage or, if the voyage is carried out in stages, at the commencement of each stage of the voyage. To be seaworthy, the ship must be reasonably fit in all respects to encounter the ordinary perils of the contemplated voyage, property crewed, fuelled and provisioned, and with all her equipment in proper working order. Cargo policies waive breach of the warranty, except where the Assured or their servants are privy to the unseaworthiness. Breach of the warranty is not excused in a hull voyage policy, literal compliance therewith being required. Although there is no warranty of seaworthiness in a hull time policy, claims arising from unseaworthiness may be prejudiced if the ship sails in an unseaworthy condition with the knowledge of the Assured.

SECURITY:   The Underwriters subscribing a risk. The Insurers.

SHORT-RATE:  Cancellation of an insurance contract at the request of the policyholder with a refund of premiums to the policyholder less than would be given under pro-rata consideration.

SOLVENCY:  Sufficient assets and income.  It is the primary responsibility of a state's insurance department is to monitor insurance companies licensed to transact business within their state and make certain that they remain solvent and have the ability to pay the claims of their policyholders.

SPECIFIED DISEASE INSURANCE:  A policy which provides stated benefits, usually of large amounts, toward the expense of treatment of the disease or diseases named in the policy.

STOP LOSS:  (1) Any provision in a policy designed to cut off the insurance company's loss at a given point. Aggregate benefits and maximum benefits are an example; (2) A type of reinsurance designed to transfer the loss from the ceding company to the reinsurer at a given point.

SUBROGATION:  The legal process by which an insurance company seeks from a third party who may have caused the loss, recovery of the amount paid to the insured.

SUBROGATION WAIVER:  A waiver by the named insured giving up any right of recovery against another party. Normally an insurance policy requires that subrogation (recovery) rights be preserved.

SUE AND LABOR:   Expenses incurred by the Assured or their representatives with the intention of preventing or minimizing a loss for which the Underwriter would have been liable. They do not include expenses incurred in general average or salvage acts; these being recoverable under the policy only as part of the Underwriters' liability for contribution to general average or salvage, if any. Sue and labor charges are recoverable under a policy that incorporates a sue and labor clause (SG policy), or in accordance with the wording of the policy (e.g. under the "duty of the Assured" clause attached to a MAR policy).

SURETY:   (1) A term loosely used to describe the business or suretyship or bonds. Suretyship is an arrangement whereby one party becomes answerable to a third party for the acts of neglect of a second party; (2) The party in a surety arrangement who holds himself responsible to one person for the acts of another.

SURETY BOND:   A bond in which the surety agrees to answer to the obligee for the non-performance of the principal (known as the obligor).