A clause in the third party section of a private car policy permitting the insured to drive private type cars or motor cycles not belonging to him and not hired to him under a hire purchase agreement. If the insured parts with the insured car, the extended indemnity ceases to apply as the main indemnity then terminates. Occasionally, as an underwriting measure, the insurer may delete the extension.

An excess layer, umbrella liability policy or excess of loss treaty that lowers, i.e. drops down, its excess point if the limits of the underlying layer or retention have been exhausted. ‘Drop downs’ are subject to annual aggregate limits. The insured/reinsured may be able to absorb a given retention level on one loss but additional losses need the added protection afforded by the drop-down. ‘Drop down’ covers may also pick up gaps in cover as may happen in umbrella liability policies and master global policies sitting over local policies. See TOP AND DROP.

The following are categorised as dry perils: aircraft, explosion, riot and civil commotion, malicious damage and earthquake. They are a group of perils, additional perils, that extend the cover under a standard fire policy.

The costs of entering and keeping a vessel in dry dock for repairs form a part of the repair costs. See COMMON CHARGES.

Method of insuring ‘wages’ under a business interruption policy when not included in the full payroll in the gross profit item. The policyholder insures 100 per cent of his payroll for an initial limited period, e.g. 13 weeks, but only a percentage, e.g. 25 per cent, for the remainder of the indemnity period to retain key staff. On payment of an additional premium, the insured can ‘consolidate’, i.e. extend the initial period of full cover for a longer period with no cover thereafter.

Written in the Lloyd’s market, these reinsurance contracts contain elements of more than one type of risk (e.g. marine and nonmarine). The leading underwriter indicates on the slip the percentage split between the two classes.

Occurs when, following a pension sharing order, an exspouse, in receipt of a pension credit, becomes a member of the pension scheme in his or her own right alongside the member.

The process of investigation undertaken when one company is about to acquire another. It means thorough checks on a company’s financial performance and its liabilities, e.g. inadequately insured losses or risks, before a transaction is completed. Reports from solicitors, accountants and insurance brokers are a part of the process. Failure to exercise due diligence could expose directors and officers to claims insurable under directors’ and officers’ liability insurance.
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Proper care and attention. This term is commonly used to refer to the review of financial and legal documents in a merger or acquisition but is equally applicable to virtually any decision-making process, including whether to insure or self-insure, whether to form a captive insurance company, and a host of other risk management decisions.

A form that allows storage of information so that it is accessible for future reference, and allows information to be produced without changes. This includes paper, floppy disks, CD-ROMs, DVDs and hard drives where e-mails are stored. See DEMANDS AND NEEDS STATEMENTS.

Where an insurance is expressed to cover the period from one particular day to another, the insurance expires at midnight on the last day unless otherwise stated. However, a policy may not run its course for the following reasons: (a) payment of the full sum under the policy discharges it; (b) agreement between the parties; (c) termination by the insured in the case of permanent contracts (life and income protection), normally by non-payment of the premium; (d) withdrawal from contract during the cooling-off period; (e) determination for breach of condition or warranty.