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Guadalajara Convention, 1961

This Convention which was signed on 18th Sept., 1961 and became effective on 1st January, 1964 supplements the Warsaw Convention. The Convention provides that if an actual carrier performs the whole or part of carriage which is governed by the Warsaw Convention, then both the contracting carrier and the actual carrier shall be subject to “Carrier Contracting Aviation”: and “Carrier Actual, Aviation.”

Guarantee

(i) A written undertaking given by one party to another to answer for the fulfillment of the obligations of a third party. (ii) A facultative reinsurance.
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REINSURANCE: Facultative Reinsurance.
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UK: Promise to answer for the debt or default of another person. It is unenforceable unless evidenced in writing. The party giving the guarantee is the guarantor or surety (an insurer), the person receiving is the guarantee or creditor (e.g. the employer) and the person whose debt or performance, etc., is guaranteed is the principal (e.g. the employee). A fidelity guarantee policy may be either insurance by way of indemnity only, or a combination of both indemnity and guarantee in which case the law of insurance applies as between the insurer and the insured (the employer), but guarantee law applies between the insurer and the principal (the employee). The policy is one of ‘insurance only’ if effected without the constructive knowledge and consent of the principal. See INSURANCE GUARANTEE; PURE GUARANTEE.

Guarantee endorsement

Insurance policy endorsement covering the policyholder’s interest in mortgaged property providing that, if the insurer becomes insolvent, the reinsurer will pay any claim due directly to the mortgagee and/or policyholder. The endorsement is also called the mortgagee endorsement and conceptually is similar to the cut-through clause.

Guarantee Fund (US)

This is a US term that is applied in two different ways (01) In the context of mutual insurers it refers to the amounts policyholders may be called to pay in addition to their premiums if the insurer is unable to meet its claim liabilities. (02) A premium levy on all insurers within each US State to form a centrally run fund to pay the claims and other outstanding liabilities of insolvent companies.

Guaranteed annuity option

The right to use the proceeds of a pension plan or insurance policy to purchase an annuity at a minimum rate guaranteed in the contract. Insurers are exposed to the risk of falling interest rates and may use derivative contracts to protect themselves against potential losses. See also OPEN MARKET OPTION.

Guaranteed asset protection (GAP)

Pays the difference between the amount outstanding on a loan and the amount paid by an insurer if the asset, e.g. a car, is written off or stolen. It prevents the former asset owner being left with a debt. Cover is available on cars, caravans, motor cycles and light commercial vehicles and non-vehicular assets. See VEHICLE REPLACEMENT INSURANCE.