ACT When a Motor Insurance policy is issued against an "Act" only, the coverage is sufficient only to meet the minimum requirements of the Road Traffic Ordinance, that is, protection against liability arising from injury to third party.

ADJUSTER A person appointed either by the insurance company or insured to assist in claims verification and settlement, so that a claim can be settled expeditiously for the mutual benefit of both parties.

AGENT A person licensed by the General Insurance Association of Malaysia (PIAM) to represent the insurance company in transacting insurance contracts as well as to provide after sales service to the policyholder .

ARBITRATION This is a policy condition which allows the parties to the contract to seek recourse from Arbitrators on claims disputes either involving issues on quantum or liability, before seeking redress through the arduous and time consuming legal process in a court of law.

ASSIGNMENT Assignment involves the legal transfer of the interest of a policy holder in an insurance policy to another nominated person.

AVERAGE CLAUSE This clause in effect makes the insured a co-insurer when property insured is inadequate or under insured.


BENEFICIARY The recipient of the contractual benefits from an insurance policy which is a Benefit type policy. Example of such a policy is a Personal Accident Insurance policy.

BROKER A marketing professional who represents insurance buyers and who deals with insurers in arranging suitable insurance policies for their clients.


COMMISSION Part of an insurance premium paid by the insurer to an Agent or Broker for their services in successfully transacting an insurance coverage.

COMPREHENSIVE COVER Comprehensive policies provide the insured with the widest form of insurance protection which also includes loss of or damage to the insured vehicle besides that provided for under the "Act" only and Third Party Cover.

CONTRIBUTION A policy condition that protects an insurer to pay a claim up to the rateable proportion of loss in the event there are other insurance policies covering the same property at the time of loss.

COVER NOTE A temporary legal document issued as evidence of contract confirmed between insured and insurer. The usual validity period of a cover note does not exceed thirty (30) days.


DUTY OF DISCLOSURE The proposer who wishes to take up an insurance cover has a duty to disclose all information, material to the type of insurance protection required.

DOUBLE INDEMNITY The double payment of a specified benefit in a Personal Accident policy upon the happening of certain predefined incidents.


ENDORSEMENT An endorsement is an addendum added on to the original insurance policy, making some alteration to the original provisions of the policy.

EXCLUSION These are specific conditions or provisions on a policy document for which the policy will not respond.

EXTENSION This would involve either an extension of the original policy period or extension of policy coverage. Additional premium is chargeable on extensions.


INDEMNITY This is a principle of insurance according to which an insured when being compensated for a loss should be placed in the same financial position as he was before the loss.

INSURABLE INTEREST This is the financial interest an insured has on the property or subject matter of insurance such that any loss or damage to the property/subject matters, results in financial loss to the insured.

LIMIT OF LIABILITY A sum stated on the policy beyond which an insurer will not liable to pay for a loss.


MARKET VALUE The price at which an item or property can be bought or sold at any particular time.


POLICY This is the document evidencing the contract drawn up between the insured and insurer.

POLICY CONDITION A policy condition is a provision appearing on an insurance policy which qualifies or places limitations on the policy.

PREMIUM The sum of money paid by a policyholder as consideration to the insurer for the contract (insurance policy) and for a specified period of time (usually one year).

PREMIUM WARRANTY This warranty imposes an absolute condition on the insured to ensure that premium for the policy issued is paid to the Insurer within sixty (60) days from the date of inception of the policy, failing which the policy is automatically cancelled on the sixty first (61st) day and the Insurer becomes entitled to the proportionate premium for the 60 days in respect of which, insurance was provided.

PROPOSAL FORM This legal document forms the basis of contract between the proposer and Insurance Company. Once a proposal has been accepted by the Insurance Company, the information contained in the proposal form becomes the basis of the insurance contract.


REINSTATEMENT VALUE The cost to replace insured property at costs prevailing at the time of loss without any deductions for depreciation and wear and tear.

RENEWAL Renewal is the continuation of an annual insurance contract beyond the original stipulated period by the insurer's acceptance of premium for another annual policy period.


SHORT PERIOD RATE A premium cost charged in accordance to the time for which insurance is required, usually for periods ranging from one (1) week up to eight (8) months.

SUBROGATION This is a policy condition that gives an insurer the right to seek recovery for a loss that has been paid from an identified party who is at fault.


TARIFF The Tariff is a Manual and Guide, which regulates the rates, policy conditions and coverage for the Fire and Motor insurance classes in Malaysia.

THIRD PARTY COVER This coverage provides protection against the standard 'Act' cover as well for damages caused to third party vehicles.