Like any other subject, the insurance is an ocean to learn. For someone who is new to this kind of business, where the trade has to happen between nations as sea or ocean as the medium of transport, there are numerous words to learn from the dictionary of marine insurance. Enhance your business vocabulary with a few terms related to this subject. Who knows, they might come handy as and when required in a situation that meets with the venture over marine.
Interesting terminology – Few of these terms might sound so general, it feels like it was used on regular basis. But, try finding the meanings related to marine insurance which might help in coping up the scenario.
The terms are ATL – A- Actual, T-Total, L-Loss, CTL – C-Constructive, T-Total, L-Loss, General average, average, franchise, co-insurance, retention, deductible, and excess.
ATL and CTL are useful in determining the loss that happened to a cargo, and these two acts act as proof to separate the loss. Actual Loss is when the damage happened is equal to the value or exceeds from real property value. Constructive loss is when both the cost of loss and salvage together can match the value or exceed. It helps in proper assessment of the damage happened in a situation.
Actual Total Loss = [Cost of damage or loss > (or) = property value] Constructive Total Loss = [Cost of (repairs + salvage) > (or) = property value]
General average – It is different from the department that covers marine insurance. To declare general average, there should be some event that has happened out of the ship owner’s control, voluntary sacrifice, some of the property saved. It is a typical clause provided for such a situation.
Average – Average can identify if a good is insured lesser than it’s worth. It can reduce payable amount of the claim.
Excess – In a situation where loss happens, the amount that is payable by the insurance.
Franchise – It is the least amount of damage or loss that should be paid by the policy holder even before the insurance company covers the policy limit.
Co-insurance – This is an amount that should be paid by the individual for any type of service provided by the respective insurance company after paying the deductible.
Retention – In case of no-insurance for the loss happened, assumption of risk is termed as retention.
Deductible – Before an insurer pays the coverage of the claim, some amount needs to be paid by the individual for the loss.